Five senior figures from Whitehall and Westminster will determine whether the intelligence services gave an accurate picture of Iraq's weapons of mass destruction in the approach to war, Jack Straw announced yesterday.
The six-month inquiry, chaired by the former cabinet secretary Lord Butler of Brockwell, will meet in private. It will also examine the intelligence on weapons held by other "countries of concern" and recommend reforms of how the Government gathers, evaluates and uses intelligence on weapons of mass destruction.
The Foreign Secretary said the Government would publish its report before the parliamentary recess in July, but warned that sensitive parts of the conclusions and recommendations would stay private.
The committee of inquiry, the fourth to examine the run-up to war, will include Ann Taylor, Labour chairman of the parliamentary Intelligence and Security Committee (ISC), and Michael Mates, a senior Conservative member of the ISC. But Alan Beith, the Liberal Democrat representative on the all-party ISC, will not join the inquiry after Charles Kennedy, the party leader, refused to sign the remit laid down by Tony Blair.
The remaining two places on the panel go to Sir John Chilcot, a career diplomat and staff counsellor for the security and intelligence services, and Lord Inge, a former chief of the defence staff.
Under the remit announced to MPs yesterday the inquiry will be modelled on the Franks inquiry after the Falklands War. It will investigate the intelligence "coverage" on weapons of mass destruction in rogue states. It will look at the accuracy of intelligence on Saddam Hussein's arsenal and examine discrepancies between the intelligence "gathered, evaluated and used by the Government before the conflict".
Mr Straw and Mr Blair insisted that the investigation would not repeat the work of the Hutton inquiry and would not examine the political judgement to take Britain to war.
Conservatives, who have been pushing for an inquiry for weeks, welcomed yesterday's announcement but anti-war Labour backbenchers said the investigation did not go far enough. Michael Ancram, the shadow Foreign Secretary, said: "It is gratifying to see that the Prime Minister who has no reverse gear can still execute impressive U-turns. There can be few more spectacular examples than this one. Even after Lord Hutton reported, senior ministers, including the Lord Chancellor on Sunday were still insisting that an inquiry was not needed."
The turnround follows the statement in Washington made by David Kay, former head of the Iraq Survey Group (ISG), admitting that intelligence about Saddam's weapons had been wrong.
Mr Straw defended the decision to go to war, but told MPs that Mr Kay's testimony raised "wider and entirely legitimate concerns" about the intelligence basis for war. He paid tribute to the work of the intelligence services and added: "This inquiry is emphatically not a challenge to that vital work, but what it should do is help the Government better to evaluate and to assess the information they provide."
He said the decision to go to war was justified. "That is a decision for which we, as elected representatives, took responsibility and will continue to take responsibility. We cannot sub-contract that to any inquiry however distinguished."
Mr Blair, giving evidence to the Commons Liaison Committee of senior backbenchers yesterday, also said the inquiry would not examine the political decision to go to war. "We can't end up having an inquiry into whether the war was right or wrong," he said. "That is something we have to decide. We are the politicians."
He added: "I think it is right, as a result of what David Kay has said - and the ISG now probably won't report in the very near term its final report - that we have a look at the intelligence we received and whether it was correct. But whatever is discovered as a result of that inquiry, I do not accept that it was wrong to remove Saddam Hussein or the world is not a safer or better place for that."
Mr Straw said the inquiry would work closely with the US investigation ordered by President George Bush and would liaise with the Iraq Survey Group still searching for evidence of Saddam's arsenal in Iraq. It will have access to all intelligence reports and assessments of the time and call witnesses to give evidence behind closed doors.
The Butler inquiry has been closely modelled on the Franks inquiry set up as the response of Margaret Thatcher to months of claims that government misjudgment and incompetence led Britain into a short, bloody and ultimately avoidable conflict.
With a committee of senior Privy Councillors, Lord Franks spent six months investigating how Britain had been caught unawares by the Argentinian invasion of its dominions in the south Atlantic.
Like the inquiry to be led by Lord Butler into the reliability of the intelligence that was used to justify the invasion of Iraq, the Franks committee sat largely in private, due to the "highly sensitive" nature of the evidence it was considering.
Lady Thatcher was asked to testify before the peer and his fellow inquisitors, who included a former chancellor of the exchequer and a former home secretary. While the advice and information provided by intelligence services came under his remit, Lord Franks also looked into the probity of the political decisions that led to the war.
When the report of Lord Franks, a former ambassador to Washington and head of an Oxford College, was published in 1983 it was derided by the then Labour leader, James Callaghan, as "chucking a bucket of whitewash" over the truth.
In words which echo concerns raised last week about the Hutton report, Mr Callaghan said of Lord Franks: "For 338 paragraphs he painted a splendid picture, delineated the light and the shade, and the glowing colours in it, and when Franks got to paragraph 339 he got fed up with the canvas he was painting, and chucked a bucket of whitewash over it."