Blair blocks embargo to save arms deal

In a remarkable turn of events, Downing Street slapped down the Trade and Industry Secretary by flatly contradicting briefings given by her department over the weekend.

The switch left the UK’s arms policy in confusion, with Labour MPs calling for an embargo, having mistakenly welcomed one they believed to be government policy.

Mr Blair is understood to be furious that Ms Hewitt authorised such briefings without consulting Downing Street.

Robin Cook, the Leader of the House of Commons, was among the MPs who seemed to suggest that British Aerospace’s 1 billion contract to sell aircraft to India was off.

This is understood to have angered Mr Blair, who has personally lobbied for BAE, which has taken 15 years of negotiation, to go ahead.

BAE has close links to Labour. Mr Blair flew to Prague in March earlier this year to help it win a contract in the Czech Republic.

The ill-timed row emerged as the Foreign Secretary, Jack Straw, left for talks in Islamabad with the Pakistani president, General Pervez Musharraf.

He warned once more that the escalating face-off over Kashmir could bring a nuclear war between India and Pakistan, as well as "death, destruction, disease and economic collapse". General Musharraf, in a televised speech to the Pakistani people last night, offered few concessions to India, which has blamed Pakistan for supporting Islamic terrorism in Kashmir.

In Washington, Pentagon officials leaked a US intelligence estimate that 12 million or more people could die in any nuclear exchange.

Yesterday morning, MPs had reacted favourably to the proposed embargo.

Martin O’Neill, the Ochil MP who chairs the trade and industry committee, said an embargo was "the correct thing to do". Later, Mr O’Neill said that confusing signals from the DTI and Downing Street "don’t allow us to see what is happening".