TWO of Britain’s top spymasters and the government’s most senior law officer are facing criticism from an official inquiry into the handling of intelligence on Saddam’s weapons of mass destruction (WMD).

A draft report of the inquiry by Lord Butler of Brockwell singles out the roles of John Scarlett, head of the joint intelligence committee (JIC), Sir Richard Dearlove, the head of MI6, and Lord Goldsmith, the attorney general, for censure, insiders say.

The 100-page draft criticises MI6 after it admitted its intelligence on Saddam Hussein’s WMD had been wrong.

The JIC, which co-ordinates the work of the intelligence services, is censured for having excluded important caveats in MI6’s intelligence from Tony Blair’s infamous dossier of September 2002, according to Whitehall sources.

Downing Street has already seen draft extracts and is braced for a fresh controversy over Iraq as the dossier, with its claim Saddam could deploy the weapons within 45 minutes, formed the basis for Britain’s justification for going to war.

Butler’s draft report — as outlined to The Sunday Times — highlights the role of Goldsmith, who advised the cabinet that the war was legal. The inquiry has been told of an apparent inconsistency in that Goldsmith cast doubt over his advice during private conversations with fellow government law officers.

Goldsmith is said to have told one senior legal figure — thought to be Sir David Calvert-Smith, the former director of public prosecutions — that he shared the concerns of Elizabeth Wilmhurst, the Foreign Office legal adviser who resigned because she believed the war against Iraq was illegal.

Butler’s five-strong review team will spend the next three days arguing over the wording of the final draft, which is due to be published in 10 days’ time. One of the issues being debated is whether individuals should be named.

Sources say Ann Taylor, the former Labour chief whip and chairman of the parliamentary intelligence and security committee, is opposed to “naming and shaming” individuals. She is battling with the rest of the committee, including Butler, over the level of criticism to be attached to the three men.

One Whitehall source said: “Butler’s conclusion will be that the intelligence was wrong and the system for checking it didn’t work.”

Downing Street is devising a response in which Blair will acknowledge the dossier contained information that, in hindsight, was wrong. But he will maintain it was the procedures for gathering and analysing the intelligence that were at fault — and that the war was justified.

Senior officials say MI6 has accepted its agents supplied them with wrong information about WMD. They believe that Saddam may have been “bluffing” when he let it be known he was producing chemical and biological weapons.

In his foreword to the Iraq dossier, Blair said that “intelligence has established beyond doubt that Saddam has continued to produce chemical and biological weapons . . . I and other ministers have been briefed in detail on the intelligence and are satisfied as to its authority.”

But sources say the Butler report will show that Blair’s claim was false. MI6, however, is already preparing to defend itself, arguing that it is not solely to blame for the final version of the dossier.

A senior official said MI6 had acted in good faith and that its information had come from a handful of reliable sources.

It was apparently corroborated by other intelligence intercepts provided by GCHQ, the eavesdropping centre at Cheltenham in Gloucestershire, and matched assessments by other western spy agencies — a point Butler has investigated by interviewing officials in the US, France and Germany.

MI6 officials now accept that their agents were misinformed about the true state of Saddam’s WMD programme. The inquiry has ruled out a concerted effort by the sources to mislead MI6 for their own political gain.

As well as examining the weaknesses in MI6’s agent base, Butler takes a critical view of the role of the JIC. He has spoken to five former JIC chairmen about how the system can fail to challenge “received wisdoms” passed on to them by intelligence agencies.

The draft is also understood to analyse how caveats attached to MI6 intelligence summaries were dropped by Scarlett.

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