A top British government official warned Prime Minister Tony Blair more than a year before the London transit bombings last month that Britain's policy in Iraq and the rest of the Middle East was fueling extremism among British Muslims, a London newspaper reported Sunday.

"British foreign policy and the perception of its negative effect on Muslims globally plays a significant role in creating a feeling of anger" especially among younger British Muslims, Michael Jay, the top civil servant in the Foreign Office, wrote in a May 2004 letter that was reported by the Observer newspaper. "This seems to be a key driver behind recruitment by extremist organizations."

Blair has consistently denied a link between Britain's participation in the U.S.-led war in Iraq and the July 7 bombings, which killed 52 people, along with the four presumed bombers, and injured 700 others on three London subways and a bus. Blair has said the accused bombers -- all young Muslim men, several of them British citizens -- were motivated by a "perverse" interpretation of Islam and that similar attacks had been happening since long before the Iraq war began.

Jay's letter makes clear that Blair was warned of the dangers of Britain's falling esteem in the Muslim world because of its Iraq policy 14 months before the London bombings.

The Observer also quoted from a government "strategy document" attached to the letter that states: "Muslim resentment towards the West is worse than ever. This was previously focused on the U.S., but the war in Iraq has meant the U.K. is now seen in similar terms -- both are now seen by many Muslims as 'Crusader states.' "

Liam Fox, the Conservative Party's top foreign affairs official, said in an interview Sunday that the Blair government had been "foolish" and displayed a "lack of candor" in insisting that the bombings were not related to Britain's policy in Iraq. "The claim that there was no link whatsoever flies in the face of reason," Fox said.

Also Sunday, Reuters reported that an Algerian man being held by Thai police may be linked to the July 7 bombings. Atamnia Yacine, 33, who was detained Wednesday in Bangkok, faces charges of possessing 180 fake French and Spanish passports and overstaying his visa, the news service reported. It added that Thai police suspect Yacine may have supplied fake travel documents used in the London attacks.