A top British government official warned Prime Minister Tony Blair last year that Britain's involvement in the Iraq war was fostering Muslim extremism at home, according to a leaked memo published on Sunday.
The warning was delivered just over a year before four British Muslims carried out bombings of London's transport network, killing themselves and 52 other people.
Two weeks later, similar attempted bombs by another group of British residents failed to detonate.
The Observer newspaper printed a letter from Michael Jay, the top civil servant at the Foreign Office, dated May 2004 which said invading Iraq had made Britain a target for terrorists. "British foreign policy and the perception of its negative effect on Muslims globally plays a significant role in creating a feeling of anger and impotence among especially the younger generation of British Muslims," Jay's memo said.
"This seems to be a key driver behind recruitment by extremist organisations," it added.
A Foreign Office spokesman said the department never commented on leaked documents. The Observer carried a photograph of the memo on its front page.
Jay's assessment will embarrass Blair's government which has consistently denied a credible link between Iraq and the terrorist threat to Britain, saying that countries that had nothing to do with that war had also suffered attacks.
Opposition Conservative party chairman Liam Fox said the government's denial of a connection was politically "inept". "It's simply not sensible ... for the government to say there is no link whatsoever between what is happening in Iraq and what is happening in terms of recruiting extremists," Fox told BBC Television.
Another recent leak showed British intelligence chiefs were also warning ministers of an "Iraq factor" shortly before the July 7 bombings.
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