British officials warned of "heavy-handed" American tactics in Iraq and cautioned that revelations about the abuse of prisoners had "sapped the moral authority" of the US-led coalition, according to a leaked report published yesterday.
Details of the internal Foreign Office memo emerged as Labour leaders were warned by campaign teams across the country that middle-class members in marginal seats were deserting the party in droves over the occupation of Iraq.
The memorandum, said to have been written last week and leaked to The Sunday Times, warned that "heavy-handed US military tactics in Fallujah and Najaf some weeks ago have fuelled both Sunni and [Shia] opposition to the coalition and lost us much public support outside Iraq."
It added: "The scandal of the treatment of detainees at Abu Ghraib has sapped the moral authority of the coalition inside Iraq and internationally."
MPs have been calling on Tony Blair to distance London from Washington, amid criticism that he is too close to President George Bush. Ministers are still deciding whether to dispatch further British forces to Iraq.
There is deep anxiety in the Labour leadership ahead of the local and European elections on 10 June about a possible revolt by party supporters against the war. The unrest is also seen to have worrying implications for the general election.
"They cannot get members out on the knocker for the elections," said a former cabinet minister. "They have had reports back from across the country, and they are dire."
Michael Howard, the Tory leader, has privately told his front bench team that Labour's share of the vote could fall to the Liberal Democrats' level in the polls on 10 June, triggering a fresh round of speculation about Mr Blair's possible resignation before the general election.
The reports, which have alarmed those close to Mr Blair, also say that Muslim voters are hostile to Labour over the war. Reports from Labour's heartlands are not much more encouraging, say party insiders.
The party's core voters and members in working-class areas are still supporting the Government, because of the high numbers in work, and improvements in public services. However, there are fears that they will not turn out to vote.
A Cabinet minister said: "There is real hostility in middle-class areas and Muslim areas. We are not encountering that hostility in our heartland areas, but that doesn't mean that they are going to go out and vote for us."
The Parliamentary Campaign Team - appointed by Mr Blair to improve campaigning by Labour MPs in Labour's target seats - has urged MPs to turn out to support the London campaign for Ken Livingstone to win re-election as the Labour Mayor of London.
Peter Hain, the Leader of the Commons, acknowledged the Government's difficulties in the forthcoming elections yesterday and pledged to listen to the electorate. "This is the first difficult period we have had as a Government. We are now in our eighth year of power, and we will obviously have to listen to what voters tell us on June 10.
"What we need is to keep our eye on the ball of a British Government, led by Tony Blair, making sure that for the first time we have the prospect of opening up democratic elections next year, free democratic elections for the first time and in the meantime an interim Iraqi government established at the end of June. Let's focus on that instead of all the side issues."