Labour MPs blamed Home Office aides to Michael Howard, the Home Secretary, for disclosing details of the talks held at the Commons between the Prime Minister and the Labour leader under Privy Council terms of secrecy.
Mr Howard denied the Government was responsible for the leak, but it is certain to lead to furious exchanges in the Commons. Some Labour MPs were threatening to name one official and a minister they believe responsible, as they called for a government inquiry.
The Labour leader met the Prime Minister in Mr Major's room at the Commons to seek a compromise over the Act, and so restore the bipartisan approach to anti-terrorism which broke down in the mid-1980s.
Mr Smith urged Mr Major to drop two key powers: an extension of detention of suspects for up to seven days without charge, which he wanted limited to four days on the agreement of a court; and the exclusion orders which prevent named individuals, such as Gerry Adams, the Sinn Fein leader, from visiting Britain, while free to travel in Ulster.
No formal reply has been made, but yesterday on BBC TV's Breakfast with Frost, Mr Howard rejected Mr Smith's demands, saying it would be 'grossly irresponsible' to comply in the light of the 'deadly battle against terrorists'.
Labour's leaders said it would vote against the renewal of the powers. Tony Blair, shadow Home Secretary, who has sharpened Labour's appeal on law and order, accused the Government of playing 'party politics' over terrorism.
The decision to seek the renewal of the consensus was taken by Mr Smith in consultation with Mr Blair and other key frontbenchers, including Kevin McNamara, the spokesman on Northern Ireland. It did not go to the full Shadow Cabinet for approval. Mr Smith's move threatened to upset the left of the party, who are determined to oppose the renewal of the Act on Wednesday in the Commons on the ground that it breaches civil liberties.
However, the fury of Labour's left wing was directed at the Government. Clare Short, Labour MP and a prominent campaigner on Ireland, said: 'The Government is trying to get short-term political advantage from a serious attempt to deal with people who are using violence for political ends. Who is the big statesman? John Smith who tries to get some consensus or John Major?'
Labour leaders were worried the disclosure of the talks would expose Mr Smith to accusations of seeking to reverse Labour's opposition to the Act so as to avoid undermining its law and order campaign by appearing 'soft on terrorism'. Mr Blair said it would 'backfire on the Government', adding that the detention powers in the Act were criticised by the European Court of Human Rights.
David Hill, Labour's director of communications, said: 'We want to know who it was who leaked it because this makes a bipartisan approach on this very difficult area impossible. How can we now have serious discussions between the two leading parties on matters to do with security in Northern Ireland if you cannot maintain security about these discussions?'
Government sources said last night that Labour would split if it attempted to vote in favour of the Act, introduced under Labour in 1974 after the Guildford pub bombing. A minister said: 'John Smith was seeking a way out of his own troubles. We will be making sure that the British public understand that. We would be sacrificing people's safety for Labour unity, if we gave in to his demands.'
Mr Howard said: 'I'm sure that John Smith is as keen to defeat the terrorists as we are but . . . he has voted against powers which are desperately needed.'Reuse content