Iraq has fuelled terror threat, US intelligence warns

President Bush's rationale for the invasion and occupation of Iraq has taken a heavy blow with a new assessment by the country's intelligence community that the war and its aftermath have fuelled Islamic extremism, and increased - not diminished - the terrorist threat to the US.

Top Republicans yesterday leapt to the administration's defence, insisting that the US had no option but to stay in Iraq. "Either we're going to be fighting this battle, this war, overseas or its going to be right here in this country," said Bill Frist, the Senate majority leader.

But the findings could scarcely have come at a more delicate time, weeks before mid-term congressional elections in which Mr Bush's claim to have made the country safer will be a central theme. They also contradict Mr Bush's recent assertions, on the fifth anniversary of the 11 September attacks, that the overthrow of Saddam Hussein had been vital to win the "war on terror". Instead the document, the gist of which appeared in The New York Times and The Washington Post yesterday, makes clear that if Iraq has turned into the "central front" in that war, as the President insists, that front is largely of the administration's making.

The conflict, in which almost 2,700 US troops and nearly 50,000 Iraqis have died, has helped inspire a spread of radical Islamic ideology around the globe, it says. While al-Q'aida itself may have been weakened since 2001, the terrorist movement had mutated into a new breed of "self-generating" groups inspired by Osama bin Laden, but with no direct structural links to his organisation.

The report warns that militants who had taken part in the anti-US fight in Iraq could go back to their own countries "exacerbating domestic conflicts or fomenting radical ideologies".

The conclusions are contained in a National Intelligence Estimate (NIE), which reflects the considered and collective wisdom of the CIA and 15 other agencies. Precise details of the report, entitled Trends in Global Terrorism, Implications for the United States, remain top-secret.

In a statement, Senator Edward Kennedy, a Massachusetts Democrat and opponent of the Iraq war , declared that the NIE should "put the final nail in the coffin for President Bush's phony argument about the Iraq war".

Prime Minister Tony Blair had his say when he mounted an emotional defence of his foreign policy at the Labour party conference last night. When questioned on the war on terror, he said: "Getting rid of Saddam and getting rid of the Taliban from Afghanistan are things I happen to be proud of."

Former president Bill Clinton also stepped into the argument over the weekend, attacking his successor for focusing on Iraq to the detriment of Afghanistan, where the 9/11 attacks were planned. Mr Bush has vowed to step up the hunt for Bin Laden, thought to be in hiding in the frontier region of Afghanistan and Pakistan. US officials have also discounted reports that the al-Qa'ida leader died in Pakistan on 23 August of typhoid fever.