Alastair Campbell, and the picture that cost Britain £1bn

Alastair Campbell has confessed to his most expensive mistake. It seemed a good idea for Tony Blair to don a protective yellow suit and visit a farm at the height of last year's foot-and-mouth crisis. But the image proved disastrous in North America, frightening off tens of thousands of potential visitors to the UK.

Whitehall officials reckon the photograph alone may have cost Britain £1bn in lost revenue. "It was a disaster," one source said.

Mr Campbell, the Downing Street director of communications and strategy, owned up to the mistake in an interview with the Foreign Policy Centre think-tank.

"There was this collision between domestic and foreign audiences," he said. "Part of our message, once we'd focused on it as a crisis management issue being led from the top, was that the Prime Minister was involved, sleeves rolled up, talking to the farmers regularly."

Mr Campbell added: "I admit this didn't cross my mind. You get these dramatic pictures of the Prime Minister wearing yellow suits, walking around a farmyard, and in America they think, 'Christ! He's got to wear a yellow suit! And he's the Prime Minister'. Because that's all they're seeing."

Mr Campbell, interviewed for a pamphlet, Public Diplomacy, by Mark Leonard, explained the need for governments to think about different audiences at home and abroad. "Our media will only ever give a narrow context. Go further abroad it gets even narrower. And so, that is the kind of thing you've got to really think carefully about."

A spokesman for the British Tourist Authority (BTA) said: "This was undoubtedly a powerful negative image about Britain not being open to overseas visitors. This had media coverage around the world."

Ironically, Mr Blair featured in a £40m "Only in Britain" TV campaign in North America and Europe aimed at reviving the overseas tourist trade. He was filmed in the garden of 10 Downing Street.