Blow for Blair as Butler prepares to release report on eve of by-elections

Tony Blair suffered another blow over Iraq yesterday when it emerged that the inquiry into Britain's intelligence about Saddam Hussein's weapons will report on the eve of two critical by-elections.

Tony Blair suffered another blow over Iraq yesterday when it emerged that the inquiry into Britain's intelligence about Saddam Hussein's weapons will report on the eve of two critical by-elections.

Downing Street is furious that Lord Butler of Brockwell, the former cabinet secretary, intends to publish his committee's report just before the votes in Birmingham Hodge Hill and Leicester South, which take place on 15 July.

Labour, which is likely to come under pressure from the Liberal Democrats in both seats, called the contests on that date in the expectation they would take place before publication of the report. Mr Blair had asked Lord Butler to complete his inquiry by the end of next month and expected his work to take him close to the deadline.

The Independent understands, however, that Lord Butler intends to deliver his verdict on 14 July, which would probably ensure that it dominates the news agenda as the by-elections take place. His move is seen by No 10 as a sign that he is determined to demonstrate his independence from the Government.

The timing could wreck ministers' plans to ensure public services dominate the by-elections campaign. The Treasury announced yesterday that Gordon Brown would release his three-year spending programme on 12 July, and ministers planned to follow it with a series of "good news" announcements.

Some Downing Street aides want to urge Lord Butler to delay his report until after the by-elections, but others argue that such pressure could prove counter-productive and undermine the credibility of his investigation. Sources close to the Butler committee suggested it had always worked to a timetable of "mid-July", and did not want to be deflected by unrelated events.

There are growing fears in government circles that Lord Butler will produce a much more hard-hitting report than was expected when his investigation was announced in February after George Bush promised a similar inquiry in the United States.

Ministers believe the former cabinet secretary will be anxious to avoid the charge of presiding over a "whitewash", a widely-stated criticism of Lord Hutton's investigation into the death of the weapons expert Dr David Kelly. One minister said: "There is a lot of anxiety in No 10. Butler has interpreted his remit widely and has been asking searching questions. The expectation is that he will produce a thorough and hard- hitting report."

The speculation is that the Butler committee will look into the way in which decisions were taken by Mr Blair's tight but informal inner circle in the run-up to the Iraq war.

Lord Butler's terms of reference were to "investigate the accuracy of intelligence on Iraqi WMD up to March 2003, and to examine any discrepancies between the intelligence gathered, evaluated and used by the Government before the conflict, and between that intelligence and what has been discovered by the Iraq Survey Group since the end of the conflict".

* Mr Blair hopes that a new security plan for Iraq will be published by the end of next month, setting a timetable for training Iraqi forces and for the eventual withdrawal of British troops.