A British intelligence document warned weeks before the 7 July bombings that events in Iraq were fuelling "terrorist related activity in the UK" , according to leaks published today.
The Joint Terrorist Analysis Centre paper added, however, that "at present there is not a group with both the current intent and the capability to attack the UK", according to sections of the dossier published in The New York Times.
The newspaper reported that it was the document's conclusion that led to the lowering of the level of terrorist threat alert in London shortly before the bombings.
Home Secretary Charles Clarke and the Metropolitan Police insisted in the immediate aftermath of the atrocities that the lowering of the threat level had no practical effect on security precautions taken in the capital.
The leaks will embarrass Prime Minister Tony Blair and other ministers who yesterday flatly rejected claims in a think tank report that the conflict in Iraq had increased the terror threat to the UK.
Both No 10 Downing Street and the Foreign Office refused to comment on today's claims.
The Prime Minister's official spokesman said: "We do not comment on leaked documents."
A Foreign Office spokesman insisted: "We do not comment on alleged leaks, whatever they are."
Foreign Secretary Jack Straw, Defence Secretary John Reid and No 10 yesterday all disputed the Chatham House think tank's conclusions that the war in Iraq andsubsequent events there had made an incident such as July 7 more likely.
They pointed out that al Qaida related terrorist attacks had been mounted against countries all over the world for years before the invasion of Iraq, and subsequently against countries not involved in the conflict.
The leak comes as Mr Blair was meeting 25 Muslim leaders in Downing Street, trying to harness their support in trying to take head-on the "perverted " ideology of would-be suicide bombers.
Conservative leader Michael Howard and Liberal Democrat leader Charles Kennedy were also at the talks, which included religious leaders, teachers and prominent Muslim businessmen.
Inayat Bunglawala, of the Muslim Council of Britain, told GMTV there had been a "clear increase in disenchantment" among Muslim youths.
He said there were a number of factors to explain the trend.
"Muslim youths are generally underachieving with high rates of unemployment. There has been a clear increase in disenchantment," he said.
But he added: "The Chatham House report also said the Iraq war had made it easier for al Qaida to exploit a sense of grievance among the Muslim community.
"It's fair the Government should ask itself whether policies such as those involving the Iraq war have contributed to this.
"We need a partnership between Government and Muslims to show people they are not being ignored and that their concerns will be heard."
British Muslim religious leaders and scholars issued a fatwa outside the Houses of Parliament yesterday in response to the London bombs.
It condemned the use of violence and stated that suicide bombs were " vehemently prohibited".
Police today were meanwhile still trying to establish exactly what kind of explosives were used in the July 7 blasts.
Forensic experts were scrutinising the four blast sites to determine the exact make-up of the substance and to see whether it can be linked to the home-made explosives found at a so-called "bomb factory" at a property in Leeds.
Early reports suggested the bombers had used a military plastic explosive during the attacks on the capital's transport network.
It was later claimed that police had found acetone peroxide - a highly volatile mixture also known as "Mother of Satan" or TATP - in a bath during a raid on a property in Leeds.
A security source said it appeared that home-made explosives had been found at an address in Leeds - thought to be a flat in Alexandra Grove in the Hyde Park area of the city.
However, the source said police were still carrying out tests to establish its exact make-up and to see whether there was any link to the substance used by the four London bombers.
Scotland Yard disclosed that more than 2,000 police officers have worked on the inquiry so far, with 500 expected to continue as permanent "core" staff.
Officers have already analysed 6,000 CCTV tapes, but by the end of the investigation they expect to have collected a total of 25,000, according to the figures.
More than 1,000 witness statements have been taken, 3,500 documents - such as letters, phone records and bills - have been seized and police are trying to follow up information from 3,500 calls to the Anti-Terrorist hotline.Reuse content