The security services face a massive overhaul after a series of high-profile intelligence blunders, including the notorious claim that Iraq could launch deadly weapons within 45 minutes of an order to attack.
Tony Blair has ordered a review of the performance of MI5, MI6, police counter-terrorist units and the GCHQ communications centre.
In an apparent admission that sections of the security services are failing, John Reid, the Home Secretary, told the Labour conference that Britain needed a "radical step change" in its intelligence services.
They had success last month with the discovery of an alleged plot to blow up transatlantic airliners . But they were embarrassed by the disclosure that one of last year's London suicide bombers was known, albeit peripherally, to security services. The 45-minute claim, alleged to come from a single source in Iraq, was later discredited.
Spending on the intelligence services has almost tripled and a recruitment campaign is under way particularly among speakers of Arabic. But Mr Reid announced that the Prime Minister had asked him, in light of the detection of the alleged aircraft bomb plot, to review the country's counter-terrorist capacity. He said: "We agree that we need a radical step change to ensure that there is a seamless co-ordinated approached to the now-seamless threat. To counter radicalisation as a nation, we need not only to tackle the immediate dangers, but put in place the concept, doctrine, laws and capabilities we expect will last a generation."
The review looks certain to result in further enlargement of the security services and new quality control checks over the gathering of intelligence.
Home Office sources indicated that the review was unlikely to result in mergers of the services' different agencies, but demand closer liaison between them.
Following his recent visit to east London, where he was heckled by a Muslim radical, Abu Izzedeen, Mr Reid promised there would not be any "no-go areas" in Britain in the fight against extremism.
The Home Secretary had been urging Muslim parents to look out for the "tell-tale signs" of brainwashing in their children during a news conference in Leyton, east London, a fortnight ago. Mr Izzedeen called him an "enemy of Islam" and attacked the government's anti-terrorism policies before being led away by police and stewards.
Mr Reid said yesterday: "We will go where we please, we will discuss what we like and we will never be browbeaten by bullies." He also said that a forthcoming anti-terrorism Bill would contain measures to limit the human-rights defences alleged terrorists can deploy in court.
With another Immigration Bill due in the autumn, Mr Reid argued that tightening controls on Britain's borders and reforming the "antiquated asylum system" were aimed at tackling "fear and feeling of unfairness". He also said it was right to fix "optimum" immigration levels to take into account the impact of incomers on schools, hospitals and housing.
On law and order, he announced a scheme to force violent criminals to contribute towards the healthcare costs of "victims that they have mutilated by their viciousness".