I just wanted to give an update on this in case anyone has the same issues in the future.
The problem did turn out to be crank end float. Apparently caused by the thrust washers falling out. Not sure what causes this.
I had a new short block fitted but luckily the dealer and warranty company paid the majority of the bill. It seems that this is a fault with the GTi. Not sure how common it is, but for the VW tech-line to immediately recognise it and claim that they have had a number of these cases, it must be fairly common. I came across a few cases on US forums.
So the new engine is just about run in and the car is now running sweet. I almost questioned selling my Clio 182 for the GTi before, but now its back on form I can't stop driving it.
For anyone looking for good Mechanic in the Croydon area, I can definitely recommend VGS up the road in Keston/New Addington who carried out the work. VAG specialist and excellent service. There car enthusiasts and they know what their doing. The mechanic who worked on my car has got a Revo stage 3 Gti and was nice enough to take me out for a drive - crazy speed.
To sum up, don't buy a GTi in which the clutch sticks after turning right.