For the social sciences a masters has been expected for the last two decades. The ESRC made it an expectation in the late 1990s I think, when they started funding research methods MA/MSc programmes.
Interesting I didn't know the 3.5 model could be used for methods training. We've only tried it for PhDs needing difficult language learning but maybe the DTPs differ in their interpretation of what they'll fund.
In my experience (ESRC funded) a masters definitely is not a requirement. I know people who went straight from undergrad to PhD on research council funding, and very recently too. I was advised to do this, but went for 1+3 (and am very glad I did as that masters training has been my bedrock).
You may have to be very patient and also consider alternative ways of getting funding, as grades do matter when it is so competitive. Could you turn that dissertation into a paper? Could you find a sponsorship and go for a CASE collaboration scholarship?
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