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Khwaja Asif, an Opposition parliamentarian, warned however that the resolution exposed a contradiction in the Government’s policy as an ally of Britain in the international war on terrorism.

In the Pakistani city of Multan, about 100 Muslim students burnt effigies of the Queen and Rushdie and shouted: "Kill him, kill him".

Rushdie went into hiding and copies of The Satanic Verses were publicly burned on the streets of Bradford after Ayatollah Khomeini issued his fatwa, ordering Muslims to kill him.

Eighteen years ago when Scotland Yard first gave Salman Rushdie police protection senior officers accepted that the operation could take years and cost millions but there was a determination that it had to be done. Senior officers felt that he could not be allowed to become a victim of extremism and Special Branch officers began their guard on him.

The first team were all volunteers because of the risk from a suicide attack. Rushdie now spends much of his time in the United States but the Yard's protection unit will still place an armed team round him when he comes to Britain. The total cost to date has been put at up to £10 million - some of it paid by Rushdie himself.

The comparatively moderate Iranian Government of Mohammad Khatami softened the country's official stance, announcing in 1998, on re-establishing diplomatic relations with Britain, that it did not support the religious edict but was unable revoke it. The country's hardliners have however not swerved in their support for the death sentence.

Yesterday, Mohammad Ali Hosseini , an Iranian Foreign Ministry spokesman, said that Rushdie was "one of the most hated figures" in the Islamic world.

"Honouring and commending an apostate and hated figure will definitely put the British officials (in a position) of confrontation with Islamic societies," Hosseini said.

"This act shows that insulting Islamic sacred (values) is not accidental. It is planned, organised, guided and supported by some Western countries."

The angry reaction in the Muslim world means that now a new threat assessment will have to be written for Rushdie, say sources at Scotland Yard. He will be given fresh advice on the precautions he takes abroad, and the unit around him in Britain may have to be beefed up.

The Satanic Verses’ treatment of the life of Muhammad was seen as blasphemous by many Muslims. Parts that caused particular offence include a suggestion that Islam was founded by the Prophet after experiencing hallucinations caused by smoking hashish.

The British High Commission in Islamabad defended the decision to honour Rushdie, one of the most prominent novelists of the late 20th century whose 13 books have won numerous awards, including the Booker Prize for Midnight’s Children in 1981.

Aidan Liddle, a spokesman from the British High Commission in Islamabad said: "Sir Salman’s honour is richly deserved and the reasons for it are self-explanatory."

Dr Muhammad Abdul Bari, the Secretary-General of the Muslim Council of Britain, today added his voice to the chorus of disapproval of the knighthood.

"Salman Rushdie earned notoriety amongst Muslims for the highly insulting and blasphemous manner in which he portrayed early Islamic figures," he said.

"The granting of a knighthood to him can only do harm to the image of our country in the eyes of hundreds of millions of Muslims across the world. Many will interpret the knighthood as a final contemptuous parting gift from Tony Blair to the Muslim world."