Supporting the US-led invasion of Iraq put the UK more at risk from terrorist attack, a report has said.
British troops in Iraq raised the threat to the UK, the report said
The Chatham House and Economic and Social Research Council report also said the invasion had boosted al-Qaeda.
UK involvement in operations against Osama Bin Laden's network had also raised the attack risk, it added.
Defence Secretary John Reid rejected the report, saying "the terrorists will kill anyone who stands in the way of their own perverse ideology".
The report, which comes less than two weeks after the London Tube and bus bombings, said the UK's anti-terrorist efforts were focused on Northern Ireland.
"This is a timely and controversial briefing paper," BBC diplomatic correspondent Bridget Kendall said.
"It suggests Britain, as America's closest ally, is at particular risk from terrorism," she said.
The report said the Iraq invasion, in which the UK had been "pillion" passenger, had damaged the counter-terrorism campaign.
It had boosted support, training and fund-raising for al-Qaeda.
Prime Minister Tony Blair had consistently insisted linking the London attacks to British involvement in Iraq or Afghanistan was wrong.
"There is no doubt that the situation over Iraq has imposed particular difficulties for the UK, and for the wider coalition against terrorism," the report said.
It also stated Britain's "international intelligence, police and judicial co-operation" in operations against al-Qaeda had put it at risk.
But Mr Reid told BBC Radio 4's Today programme: "I do not accept, when the report says we have made ourselves more of a target because of involvement in Afghanistan and Iraq and our efforts to tackle al-Qaeda, that there is another alternative which is easier and better.
"And the idea that somehow by running away from the school bully, then the bully will not come after you is a thesis that is known to be completely untrue by every kid in the playground and it is also refuted by every piece of historical evidence that we have.
"Terrorism goes way back to the late 1980s and the early 1990s."
But the report said Islamic terrorists had only become recognised as a threat in the late 1990s.
Until the July attacks, the report said the UK underestimated terrorists
Before then, groups had been able to operate in London with "relative impunity".
"In an open society, such as the UK, it is notoriously difficult to prevent no-warning co-ordinated suicide attacks, the characteristic modus operandi of al Qaeda ," the report states.
"The attacks on the transport system in London on July 7 represent precisely the nature of the threat from international terrorism that the UK authorities have been concerned about since 9/11."
It warned terrorists could try to get hold of nuclear, chemical or biological weapons.
"Their track record shows that they would have no compunction about using this type of weapon to cause large numbers of civilian deaths," the report added.