Blair admits Iraq war has been a disaster

The Prime Minister's remarks - aimed at a largely Arab audience around the world - will be seized on by his critics as proof that the war was a mistake.

However, Mr Blair made clear he blamed insurgents for the chaos since the fall of Saddam. Challenged by Sir David Frost, the veteran broadcaster, that the western intervention in Iraq had "been pretty much of a disaster", he responded: "It has."

Mr Blair added: "There's a deliberate strategy - al-Qaeda with Sunni insurgents on one hand, Iranian-backed elements with Shia militias on the other - to create a situation in which the will of the majority for peace is displaced by the will of the minority for war."

His remarks came after a government minister last night apparently savaged Mr Blair's decision to invade Iraq. Margaret Hodge, the industry minister was said to have told Labour activists at a closed meeting that the decision to go to war was the Prime Minister's "big mistake in foreign affairs". She was also said to have attacked Mr Blair's "moral imperialism".

The remarks are said to have been made at a dinner of Fabian Society members in Islington, London, on Thursday. Among the people attending was the editor of the local newspaper, the Islington Tribune.

Mrs Hodge last night looked set to keep her job. Once, such dissent would have been met with immediate dismissal. But Mr Blair, who will step down some time next year, lacks either the strength or the enthusiasm for such a public row.

While friends of Mrs Hodge yesterday questioned the accuracy of the paper's report, the minister made no public appearance to deny the remarks.

The newspaper was last night standing by its story and several people at the dinner confirmed Mrs Hodge had criticised the war in Iraq, although her exact words remained disputed.

Chris Roache, a local party member, yesterday said: "The words 'big mistake' were unequivocally clear."

However, a Downing Street spokesman yesterday said Mr Blair had full confidence in Mrs Hodge, indicating that there is no intention to dismiss her.