Blair Hit by UN Spying Claim, Attacks Accuser

That could spell danger, leaving him at the mercy of a hardcore of some 50 Labour MPs so opposed to the war they are ready to fight him on any number of issues.

"Until the boil of the truth about Iraq is lanced, the prime minister can never put this behind him," Labour MP Jeremy Corbyn told Reuters.

On Wednesday, state prosecutors said they had insufficient evidence to prove 29-year-old translator Katharine Gun broke the Official Secrets Act although she freely admitted leaking a memo which she said revealed a U.S. plot to spy on U.N. missions.

At the time of the memo, Britain and the U.S. were desperately trying to persuade wavering members of the Security Council to vote in favor of war against Iraq.

Blair's opponents believe the government's top lawyer, Attorney-General Lord Goldsmith, killed the case for fear that questions about the war's legality would be raised.

Goldsmith denied the case was dropped for political reasons, or that he took the decision. "At the time we started military action it was my own considered...view that military action was lawful," he told parliament. "I believe today it was the correct legal position."

Blair's spokesman said the government would review the Official Secrets Act to see if it needed amending.

Gun, who worked at surveillance center GCHQ, said she exposed "illegality and wrongdoing on the part of the U.S. government, who attempted to subvert our own security services."

The Observer newspaper said her leaked memo showed America had wanted Britain's help to bug the offices of Security Council members -- Chile, Mexico, Cameroon, Angola, Guinea and Pakistan.

Some diplomats were philosophical. In New York, Spain's U.N. ambassador Innocencio Arias shrugged and said: "Everybody spies on everybody."

(Additional reporting by Quentin Webb)