TRUST in Tony Blair has collapsed and Labour's rating has fallen to its lowest for 16 years, according to a Populus poll for The Times.

Today's findings come after Downing Street was forced to admit that one of its officials did use the phrase 'Walter Mitty character' to describe the government scientist Dr David Kelly. The disclosure followed a day of denials.

The poll, undertaken between Friday and Sunday, shows the damage done to Labour and Mr Blair by continued controversy over the Dr Kelly's death and the handling of the Iraq war.

One of the Prime Minister's official spokesmen last night admitted suggesting that Dr Kelly, whose funeral is tomorrow, could be a 'Walter Mitty' figure or fantasist, but claimed that his remark had been taken out of context and was not Downing Street's official view. Lord Hutton, the senior law lord chairing an inquiry into the circumstances surrounding Dr Kelly's death, will hear his first witness on Monday.

The Times poll shows a close link between attitudes to the Iraq war and trust in Mr Blair. Three fifths of those who still believe that the war was 'the right thing to do' trust Mr Blair 'to be honest with the British people about important and controversial issues'. A mere third of those who think the war was wrong trust Mr Blair.

But the Tories have not benefited. The Liberal Democrats have jumped four points since last month, up to 25 per cent, back near their highest levels of the late winter when they opposed going to war.

Their support has fluctuated since the end of the war but they have been above 20 per cent for well over a year, benefiting from growing disillusionment with Labour and lack of enthusiasm for the Tories. The figures will boost Lib Dem morale as the party seeks to challenge both Labour and the Tories in the forthcoming Brent East parliamentary by-election, for which no date has yet been set.

Charles Kennedy is also both the highest-rated leader, with 5 out of 10 on the Populus leader index, and the most trusted of the three main party leaders. Nearly three fifths (57 per cent) trust him a great deal or a bit, while a third (34 per cent) trust him very little or not at all.

By contrast, support for both Labour and the Tories is down two percentage points over the past month. Labour is now on 34 per cent.

This matches the party's lowest level in any poll since the 1987 general election, after a steady decline over the past year. Labour touched 34 per cent during the fuel protests of September 2000 and has done twice this year, according to other polls.

Mr Blair's rating as a leader has also fallen from a peak of 5.75 out of 10 in May to 4.92 now. More than half the public (52 per cent) trusts him very little or not at all, compared with 48 per cent who trust him a great deal or a bit, a net rating of minus four.

However, the Tories have still not overtaken Labour and are now on 32 per cent, around the average they have been for the whole of this year.

This will be seen as disappointing at a time when the Government in so much trouble. Iain Duncan Smith is still third on the leader index, at 4.35, the same score as in recent months.

The Tory leader also lags behind Mr Kennedy on trust. Half the public (52 per cent) trusts him a great deal or a bit, while two fifths (42 per cent) trust him very little or not at all, a net rating of plus ten.

The polls suggests that Mr Blair is in better shape with Labour supporters than with many Labour MPs and activists. He enjoys a higher leader rating among Labour voters than either of the other two leaders do among their supporters. Mr Blair is also trusted more by his own voters (plus 75 per cent), against plus 60 for the Tory and Lib Dem leaders.

These findings point to a marked polarisation in public attitudes, between Labour supporters who still trust Mr Blair and others, both Tories and Lib Dems, who hardly trust him at all. There are parallels to the sharp divergence in the American attitudes towards President Clinton in the mid-1990s.

The latest poll shows 'others' again on 9 per cent, a high figure by past comparisons. The others are split between nationalists, Greens and various fringe parties. Like the Lib Dems, they, too, have benefited from a 'plague on both your houses' attitude to Labour and the Tories.

Taken together, support for the Lib Dems and others together is now running at about a third.

This implies that the Lib Dems and the others could do well in the European Parliamentary and Greater London elections which will be held next June which will be held under proportional representation systems of election.

But the rise in support for the others may limit the success of the Lib Dems under the first-past-the-post system used in parliamentary and council elections.

Populus interviewed a random sample of 1,001 adults aged over 18 by telephone between August 1 and 3. Interviews were conducted across the country and the results have been weighted to be representative of all adults.

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