The US administration signalled at the weekend that it was abandoning its long-term call for a freeze on all settlement activity and would back some limited expansion.

But a Downing Street spokesman said yesterday: “Our position is consistent with the statement put out by the European Union last week, and our view is that the Israelis should freeze all settlements.”

The EU had expressed its dismay over new construction in the occupied territories.

The Palestinians claim the presence of the 120-150 Jewish colonies, home to about 200,000 people, makes the creation of a viable Palestinian state impossible in the West Bank.

The total number of permits to build settlement homes in the West Bank this year is 2,167  more than in the previous three years combined.

However, analysts of Israeli expansion claim the latest construction tenders are the tip of the iceberg, and that surveys of infrastructure work and local plans suggest that Israel plans further expansion.

Dror Etkes, the coordinator of Settlement Watch, said: “This is all part of something much bigger. There are dozens of settlements where the land has been bulldozed and roads have been built where the government is just waiting for the right moment to begin house construction.

“This is about redesigning Israel and moving the bulk of it eastwards on to the land on which the Palestinians want to build their state. It is a continuation of a process that has been going on for 40 years.”

The boom in the settlement expansion appears to have the tacit endorsement of US president George Bush’s administration. In return, Mr Sharon has promised to withdraw from the much smaller number of Jewish settlements in the Gaza Strip.

The scale of building in the West Bank can be seen by the scores of heavy lorries, laden with building materials, which daily progress up from Israel’s coastal plain to east Jerusalem and the West Bank. Some are destined for Ma’ale Adumim, an established settlement near Jerusalem with a population of 30,000.

There is large-scale construction going on, despite the apparent existing housing glut: many of the newer neighbourhoods in the settlement appear sparsely populated, while others are empty. Hoardings advertise new developments, even on sites where nothing has been built. Dual carriageways and service roads loop into areas where the earth has been flattened, but no foundations sunk.

The architect-designed houses and lush lawns of Ma’ale Adumim are in stark contrast to the ugly apartment blocks and dusty streets that mark the nearby Arab neighbourhoods.

According to the Israeli newspaper Yedioth Ahronoth, a married Israeli couple who have completed military service and have one child would receive a #25,000 subsidised loan to buy a home in the West Bank, compared with #19,250 in the Negev and #10,875 in Tel Aviv.

Jeff Halper, a veteran Israeli campaigner against the settlement expansion, argues in his book, Obstacles to Peace, that Israel’s long-term strategy is to move the centre of gravity of the country from the coastal plain by encouraging more people to live in the West Bank.

This policy also entails the hemming of the Palestinian population into small cantons which have no direct contact with other Palestinian cantons, making a viable state impossible.

 The army has agreed to make changes to the route of Israel’s separation barrier in 12 areas, Dany Tirza, an official of the Israeli defence ministry said yesterday. The supreme court ruled this summer that the barrier violated the human rights of Palestinians.

The route will be moved towards the “green line,” the 1967 border between Israel and the West Bank, Mr Tirza said. The changes will prevent the confiscation of more than 4,000 acres (1,620 hectares) of Palestinian land, he added.

Sudan has bridled at the increasing international pressure and the suggestion by General Sir Michael Jackson, the chief of general staff, that Britain would be able to send a force of 5,000 if necessary.

Yesterday its foreign minister, Mustafa Osman Ismail, said Sudan would retaliate if troops were sent.

The US secretary of state, Colin Powell, said it was “premature” to start talking of a military intervention, adding that the Sudanese government “still has the ability to take action and bring this violence under control”.

In Britain a Foreign Office spokesman asked whether what was happening in Darfur amounted to genocide said: “There are certainly some elements. There is an ethnic element to the violence, but we do not at the moment have incontrovertible proof.”

Ceasefire monitors have documented continuing instances of attacks on Darfur villages. Monitors from the African Union said that in an incident three weeks ago militiamen killed villagers by chaining them and burning them alive, Reuters reported. The Foreign Office is collating information from various sources in Darfur, and US officials have been interviewing Sudanese refugees who have crossed the border into Chad, to determine whether genocide is taking place.

Both governments are keen to keep up the diplomatic pressure on the Sudanese government in the hope that international action will not be needed. But they fear being accused of failing to act, as they were in Rwanda and in Srebrenica. Genocide is defined in a 1948 UN convention as acts “committed with intent to destroy, in whole or in part, a national, ethnic, racial or religious group”.

These acts include: killing members of the group; causing serious bodily or mental harm to members of the group; and deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part.

The US House of Representatives passed an unopposed motion last week declaring genocide in Darfur.

The Senate unanimously agreed in a voice vote.

The crisis began last year when the Sudanese government armed militia groups, known as the Janjaweed, to help suppress a rebellion.

A Foreign Office source said three tribes were being targeted  the Fur, the Masalit and the Zaghawa  but all three were also contributing members to the the two rebel movements, the Sudan Liberation Army and the Justice and Equality Movement. The source said: “At what point does civil war become genocide? We can see there is violence against these tribes by the army and the militia. It is not at the stage yet of a concerted attempt to wipe them out.”

He recognised this gap when he said the language of the dossier was “fuller and firmer” than was the actual case.

Iraq under Saddam was a notoriously difficult country for western intelligence services  and the Britain’s Secret Intelligence Service, MI6, was no exception. It regularly admitted as much in the memos, known as CX files, sent round to what it describes as its “customers” in Whitehall containing bits of information from round the world, some of it important, most of it trivial.

Britain had good intelligence on all Iraq’s neighbours but what was going on inside Baghdad remained, as one minister admitted at the time, “a black hole.”

The doubts and caveats about intelligence disappeared as the dossier was compiled.

Lord Butler chronicles this with a clarity rare in a government report. He concludes that the intelligence was “thin,” “unclear” and “uncertain.”

The most damning passage is an admission by the intelligence service that it had received almost no new intelligence from within Iraq about WMD since 1998.

That sits uneasily with Mr Blair’s claim at the time that Saddam had continued to pursue his ambitions to develop WMD and that the threat posed was imminent and serious.

The reality was, says the report, that “there was no recent intelligence that would itself have given rise to a conclusion that Iraq was of more immediate concern than the activities of some other countries.”

In a telling phrase, Lord Butler said the intelligence was stretched by the government to the “outer limits.”

His report included material on:

Sins of omission
The government announced in the spring of 2002 that it would produce a dossier.

Public scepticism in Britain was high and the dossier was designed to try to sway opinion. The dossier was a combination of Downing Street and the joint intelligence committee, the body of senior intelligence officials that sifts through the CX files to produce general reports that are normally only seen by “customers.” In this case the report was to be made public.

Lord Butler noted the benefit to the government in making clear that it was the JIC rather than Downing Street that had ownership of the document: “The advantage to the government of associating the JIC’s name with the dossier was the badge of objectivity that it brought with it and the credibility which this would give to the document.”

JIC assessments, which its “customers,” mainly Foreign Office diplomats, receive every few weeks contain many caveats about reliability and lack of information. When the dossier was published by Downing Street on September 21, such caveats were missing.

A JIC draft assessment, less than a fortnight earlier on September 9, said bluntly: “We have little intelligence on CBW (chemical, biological weapons) doctrine and know little about Iraq’s CBW work since late 1998.” This was missing from the final dossier, which instead contained a much softer version: that while intelligence “rarely offers a complete account of activities,” taken together with what is already known from other sources, “this intelligence builds our understanding of Iraq’s capabilities and adds significantly to the analysis already in the public domain.”

Lord Butler concluded that it was a “serious weakness” not to have included normal JIC warnings.

Accuracy of the dossier
The JIC assessment of the threat posed by Saddam from chemical and biological weapons was heavily caveated. Its assessment on September 9 was that “production of sarin and VX would be heavily dependent on hidden stocks of precursors.”

When the dossier was produced there was no mention of this important condition. Nor did the dossier refer to the JIC admission that there was little evidence about locations for producing such chemical and biological agents. The JIC assessment on September 9 said the former Habbaniyah chemical weapons site could provide a base for producing ricin, “although there is no evidence that Iraq is currently doing so.” There is a further contrast, though oddly Lord Butler does not refer to it.

The JIC assessment on September 9 quoted by Lord Butler says intelligence indicates that “Saddam has identified Bahrain, Jordan Qatar, Israel, Kuwait as targets.

Turkey could also be at risk.” But in the dossier this becomes Iraq possesses Scud ballistic missiles “capable of reaching Cyprus, eastern Turkey, Tehran and Israel.” The inclusion of Cyprus, and its elevation to top of the list, was because of the need to demonstrate a threat to Britain, which has an RAF base on Cyprus.

There are many other such contrasts between the JIC assessment and the final dossier. Downing Street was keen to emphasise that Iraq could pose a nuclear threat and this was reflected in the dossier as Iraq “continues to work on developing nuclear weapons.” Missing, also, was the JIC assessment that “we have an unclear picture of the current status of Iraq’s nuclear programme.”

The dossier claimed that Iraq was seeking aluminium tubes for use in its nuclear programme. Lord Butler found “overwhelmingly” that the evidence pointed to these being sought for use for rockets rather than the centrifuges needed to produce weapons-grade uranium. He concludes: “But in transferring its judgments to the dossier, the JIC omitted the important information about the need for substantial re-engineering of the aluminium tubes to make them suitable for use as gas centrifuge rotors. This omission had the effect of materially strengthening the impression that they may have been intended for a gas centrifuge and hence for a nuclear programme.”

The 45-minute claim
The most spectacularly misleading of all the claims in the dossier was the failure of Downing Street to make clear that the relevance of the warning that Saddam could deploy chemical and biological weapons within 45 minutes. The positioning of the claim meant it could be read that Saddam was capable of launching strategic missiles armed with chemical or biological or nuclear weapons within 45 minutes at targets such as Israel or Cyprus.

Lord Butler was critical of what he charitably refers to as an ambiguity but said he had no evidence this was a deliberate distortion. The Hutton inquiry showed it referred only to battlefield weapons.

Lord Butler makes it clear that the 45-minute claim was based on flaky evidence and praised Brian Jones, from the Ministry of Defence intelligence section, for expressing scepticism as the time.

The source of the 45-minute claim has not yet been identified. Lord Butler said after publication of his report that the information was not even secondhand but third hand, and that the middle man in this trio had since been discredited.

Intelligence sources
About 90%, and often much higher, of the intelligence sent to “customers” is from the US intelligence agencies rather than British and is based on listening posts rather than human intelligence. In the case of Iraq, Britain was dependent on the US for what limited information was available but it also had human sources of its own.

These sources provided the bulk of the intelligence for the more contentious parts of the dossier. Lord Butler’s report reveals the extent to which these resources were flaky: one of them was last July deemed to be unreliable and sacked.

Validation of sources
The inquiry finds attempts to explain why so many of the sources used by British intelligence on Iraq proved, after the war, to have been flaky. A particularly sharp conclusion was that in the haste to gather more intelligence to use in the September 2002 dossier, agents were relied upon who had not been properly vetted. Agents were asked to provide information that went beyond their direct knowledge, leading to speculative dispatches. Under pressure, agents drew on untried sub-sources and sub-sub-sources, several of which have since been found to have provided inaccurate information.

Language
Lord Butler is critical of the language in the dossier, which he says “may have left with readers the impression that there was fuller and firmer intelligence behind the judgements than was the case.” He also said: “We detected a tendency for assessments to be coloured by over-reaction to previous errors.” He added: “As a result, there was a risk of over-cautious or worst case estimates, shorn of their caveats, becoming the ‘prevailing wisdom’.”

The report reveals new information about the way in which thin and at times inaccurate intelligence was turned into prime ministerial certainty. In a devastating litany of mistakes, omissions and hyperbole, it says:

o Downing Street stretched the available intelligence to “the outer limits.”

o The claim that biological or chemical weapons could be deployed within 45 minutes should not have been included in the dossier, and led to suspicions that it had been inserted “because of its eye-catching character.”

o The government’s September 2002 dossier setting out the case for war had the “serious weakness” of omitting many crucial caveats about the dubious nature and limitations of much of the intelligence. The language in the dossier suggested the intelligence was “fuller and firmer” than it was.

o Britain had only a handful of “main sources” on Iraq and the quality of much of their information has since been challenged by the intelligence services themselves. Reports from a key source were withdrawn in July last year as “unreliable.”

The Butler report blames no individual, focusing instead on “group think  the development of a prevailing wisdom.” Lord Butler specifically insisted that John Scarlett, the chairman of the joint intelligence committee responsible for drawing up the Iraq dossier, should not lose his job as forthcoming head of MI6. Mr Blair seized upon the lack of personal criticism in his statement to the Commons.

“There was no conspiracy, there was no impropriety. The essential judgment and truth, as usual, does not lie in extremes,” insisted the prime minister, who also told MPs: “No one lied, no one made up intelligence.” Yet in a combative and self- justifying defence of the US-led war he accepted “full personal responsibility for the way the issue was presented and therefore any errors made.”

It fell short of the apology many had demanded. But the fourth major inquiry since the war ended gave Mr Blair some comfort by highlighting the wider case for tackling the terrorist threat. Labour loyalists, including some anti-war MPs, believe that is enough to save his leadership as the government squares up to two crucial byelections today and the beckoning general election.

But two Labour MPs broke ranks yesterday to call on Mr Blair to consider his position.

Geraldine Smith, who voted for the war, and Christine McCafferty, who voted against, both complained that backbenchers were misled last year. The Tory leader, Michael Howard, said the issue was “the prime minister’s credibility.

The question he must ask himself is, does he have any credibility left?”

Charles Kennedy, for the Liberal Democrats, said the report had underlined “the need for a proper public inquiry into the political judgments  and how they were arrived at.”

Lord Butler paints a picture of intelligence agencies under strong pressure from the government to come up with ammunition to back up the tougher stance it adopted on Iraq in early 2002. The report discloses that they did not come up with any information to back up the claim that Saddam was continuing to breach UN resolutions.

The joint intelligence committee also made no attempt to check why UN inspectors had failed to find any weapons in Iraq.

In one of his most memorable comments, Lord Butler yesterday was drawn to say: “Iraq’s a big place and there’s lots of sand.” His team included Labour’s Ann Taylor and Tory Michael Mates, both intelligence specialists, along with former chief of defence staff Lord Inge and former Northern Ireland permanent secretary Sir John Chilcot.

Greg Dyke, the director general of the BBC who resigned after strong criticism from Lord Hutton, was scathing about the accent on group rather than individual culpability. “I am fascinated by the concept that it is now going to be collective responsibility by such a large collective that no one needs to resign,” he told Channel 4 News.

Other critics emerged, from Robin Cook, the ex-foreign secretary, who dubbed Lord Butler “a wonderful specimen of the British establishment”, to Hans Blix, the UN weapons inspector, who said: “The whole point is that armed force should only be used as a last resort. The Butler report confirms that intelligence should have been reassessed, that the evidence was very weak. If that had happened they would have concluded that inspectors should have been given more time and that Saddam could have been contained.”