How unprecedented ambush fuelled leadership speculation

Tony Blair looked tanned, excited and youthful. But the film of the Prime Minister was taken at the dawn of the New Labour government seven years ago.

The image of a carefree Mr Blair on the morning of Labour's general election landslide was used by the Tories yesterday as the backdrop for the launch of the Conservative local and European election campaign with the slogan on red posters: "Let down by Labour".

As Michael Howard, the Tory leader, spoke to an empty hangar in the ExCel centre in London's Docklands, Liam Fox, the co-chairman of the Tory party, turned to a friend and said: "Do you know what is different about Blair? His hair is a different colour?"

Conservative officials said the reason for showing the film of Blair in triumph was to remind everyone how much he had changed. "He looks so much older," said one Tory official.

In Downing Street, a few hours later, Mr Blair looked strained when he held a joint press conference with Silvio Berlusconi, the Italian Prime Minister. The pair discussed the security crisis facing their troops in Iraq.

Mr Blair's official line was that Spain could withdraw its troops and he added: "For us, we are determined to see this thing through..." But his subdued mood was not only caused by the latest news of more killings in Iraq. That morning, he was faced with the unprecedented spectacle of 52 former diplomats attacking his foreign policy on the Middle East.

"We had absolutely no warning of it," said a senior Foreign Office official. "They did it pretty well. It was a pretty hard slap."

There were rumours among Labour MPs yesterday that a group of former diplomats, including some who had put their names to the joint letter, had been seen slipping into the Foreign Office a couple of weeks ago. It fuelled Westminster gossip that it was a put-up job by the Foreign Office, which is growing alarmed at the extent to which foreign policy is dictated by the White House.

Louise Ellman, a Labour MP with strong Israeli links, complained that the Foreign Office was "stuffed" with Arabists.

A former minister angrily denounced the ambassadors. "They were attacking Tony Blair," she said. "They are the union of former diplomats and they were effectively saying the Foreign Office has lost foreign policy to Downing Street."

Jack Straw, the Foreign Secretary, avoided any direct criticism of the former diplomats when he went on the Jeremy Vine show on BBC Radio 2. Mr Straw's officials also gave the impression that their remarks were not wholly out of tune with the view from Mr Straw's window overlooking St James's Park.

"Our concern is the effect it will have on morale for our people in the field," said another official. "One of them said they couldn't get the flight back to London from Baghdad the other day. When I asked why, he said, 'We are waiting for a day when the mortars stop'. It is pretty hellish out there."

In the division lobbies yesterday, as MPs plodded through to vote for the Government on the finance Bill implementing Gordon Brown's Budget, the question of the leadership was the main topic of conversation.

"Everyone is talking about whether Tony is going to go,' said a senior Labour backbencher. "You can't go on for ever in the modern media age. Seven to 10 years seems to be the limit. They are no longer talking about if, but when Tony steps down."

Mr Blair will shortly be celebrating, if that is the word, his 10th anniversary as Labour leader. The renewed speculation about Mr Blair's leadership was triggered by the weekend reports of a cabinet backlash against Mr Blair over his hapless handling of the announcement of the referendum on the European constitution.

The impression of an embattled Prime Minister, cut off from his closest allies, and surrounded by a sea of troubles was heightened yesterday by an article for The Guardian by messrs Milburn, Byers, and Mandelson. They are the three leading members of the Blairite chorus on Europe - nicknamed yesterday the "three tenors'' by Eurosceptic Labour MPs.

Their article was seen as a cry of pain from his friends, who see his European dream being destroyed by his own carelessness. "The Blair of two years ago would never have done this," said one Blair supporter. "It was intended as a message of support for Tony. That seems to have been lost on a lot of people."

Downing Street knew about the letter but the three deny they were encouraged to write it. It was seen by Labour colleagues as a clear message that they fear that Mr Blair has lost hope of the euro referendum and now, by conceding the referendum on the constitution, he risks losing Britain's endorsement of the constitution as well. That could spell long-term dangers, they believe, for Britain's place in Europe.

Meanwhile, friends of Gordon Brown were quietly contemplating the growing strength of the Chancellor.

One former minister said: "I would like to see Gordon made Prime Minister now. It doesn't look as though Blair is going to go before the general election but you never know."

Mr Brown, who has become increasingly Eurosceptic, has told friends he is glad to have the referendum as a bargaining counter to enforce Britain's "red lines" - particularly over the control of taxation - in the negotiations under the Irish presidency for the constitution to be signed in June. Mr Straw has found himself in complete agreement with Mr Brown on that and together they form a formidable alliance.

Another of the pro-European camp, Charles Clarke, has never run away from a fight and will not leave Mr Brown a clear field for the leadership, when Mr Blair does step down. He has was seen closely engaged in conversations with Peter Mandelson, the leader of the pro-euro group on Monday night.