Kenneth Clarke called Britain's involvement in the war in Iraq a catastrophic error and questioned Tony Blair's response to the London bombings in the first speech of his campaign to become the Tory leader today.

Mr Clarke, who launched his third leadership bid yesterday, said that Britain had been made more vulnerable to Islamic extremists because of the war, and that the Government's relationship with Muslims around the world would take years to repair.

"If the Prime Minister really believes it, he must be the only person left who thinks that the recent bombs in London had no connection at all with his policy in Iraq," Mr Clarke said this morning in a speech to journalists.

Although he was careful to describe America as Britain's closest ally, Mr Clarke criticised the conduct of the war in Iraq from the decision to invade right through to the current policy decisions being made in the region.

"Iraq was a diversion from the core task of the pursuit and destruction of al-Qaeda. Indeed, the failure to prepare properly for the aftermath of invasion has led to a horrifying expansion of terrorist activity in Iraq. We must not make such a mistake again," said Mr Clarke.

Although he rejected calls for Britain to immediately pull out the 8,500 troops currently stationed in Iraq, saying it would be immoral to led the country slide into anarchy, Mr Clake criticised the Government's current approach to withdrawal.

"It is obvious that we went in to Iraq without a clear plan as to what to do when Saddam had been deposed. I now fear that the US administration is about to make the same mistake again - but this time of withdrawing from Iraq without a clear plan of how to get there," he said.

Mr Clarke reserved particular disdain for the Government's response to the London bombings. He accused Mr Blair and Home Office of rushing through legislation that will curtail people's freedoms and give encouragement to terrorists.

"New laws after every terrorist atrocity can feed a sense of panic. They can also encourage the terrorists because if our response is an ever-more repressive set of laws, they will know that those laws are most likely to impact on communities from which they derive sympathy," he said.

"We must always strive to preserve the freedoms we seek to defend. You do not beat the enemies of freedom by taking freedom away," he added.

Mr Clarke accused the Government of seeking scapegoats in the form of the so-called "preachers of hate" that Charles Clarke, the Home Secretary, and the Prime Minister have been working hard to exclude and deport in recent weeks.

"The Government is also now seeking to blame our problems on the behaviour of extremist preachers in our midst," he said. "I support the expulsion of some of these vile propagandists from this country so long as the courts can be satisfied of their guilt of the crimes they are charged with."

"But the public and the media should not be persuaded by the spin from No 10 that ‘mad mullahs’ are the most important creators of the dangers we face. They are one of the symptoms of the problem rather than the cause of it."

Mr Clarke referred to his experience as Home Secretary, when he struggled to contain the violence of militant groups in Northern Ireland, to say that Britain would only become safer when the Government repairs its relationship with the Muslim community.

"No amount of military action, on however great a scale, nor tough legislation, of however draconian a nature, are in themselves going to make us safer or usher in a saner and more rational world," he said.

"Constructive political responses are far more important. We found that out for ourselves in Northern Ireland. I marvel that Prime Minister Blair, who has such an excellent record of seeing through John Major’s political initiative in Northern Ireland, should fail to make the same judgments on the problem of resolving our conflicts with the Muslim world."

"The problem of our relationship with the Muslim community, both internationally and domestically, is now one of the major political problems that British governments are going to have to face for many years to come," he said.

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