The diplomats tell Mr Blair he must start to influence President Bush
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Tony Blair brushed off criticism by 50 former diplomats over Iraq and said the battle to maintain security and establish democracy must continue.
On the diplomats' letter attacking Iraq and Israel policy, he said "people are perfectly entitled to criticise".
The letter urged him to influence the "doomed" US policy or stop backing it.
Just a day after reports that the UK was considering sending more troops, Mr Blair said there were "sufficient troops to do the job".
The Ministry of Defence stressed Mr Blair's comments about troops did not indicate a change of position and the situation would remain under review.
Mr Blair said the coalition would "have to make good any deficiencies in any countries that may withdraw their troops", but stressed that some countries like Korea and Japan were committing troops.
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There was a real difference and I think the letter failed to note that
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Speaking after talks with Italian Prime Minister Silvio Berlusconi in Downing Street, Mr Blair said Iraqis wanted a country that was stable, prosperous and democratic.
"Whether people were against the conflict or in favour, what is obvious now is that there is only one side to be on and that is the side of the Iraqi people in their journey towards democracy."
The prime minister is expected to reply to the diplomats' letter more fully "in due course".
Tory leader Michael Howard said the letter had to be taken seriously.
"It raises very serious questions that deserve serious answers from the government."
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We feel the time has come to make our anxieties public, in the hope that they will be addressed in Parliament
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Lord Howe, foreign secretary under Margaret Thatcher in the 1980s, told Radio 4's Today Programme the diplomats' comments reflected "great anxiety" in the Foreign Office and the UK over the situation in Iraq.
He warned Mr Blair would need to "unwind a long series of misjudgements" in continuing to back Mr Bush if he was to restore "even-handedness" in the UK's Middle East policy.
The diplomats said they had "watched with deepening concern" as Britain followed the US lead in Iraq and Israel and called for a debate in Parliament.
They said Mr Blair had "merely waited" for the US to advance a "roadmap" for peace in the Middle East and that had raised expectations of a lasting Israeli-Palestinian settlement.
The attack by the 52 diplomats, including former ambassadors to Baghdad and Tel Aviv, is being seen as unprecedented in scope and scale.
The document's co-ordinator, former British ambassador to Libya Oliver Miles, said: "A number of us felt that our opinion on these two subjects, Iraq and the Arab-Israel problem, were pretty widely shared and we thought that we ought to make them public."
On Iraq he added: "Through lack of planning and through a misunderstanding, a misreading of the situation, we have got ourselves into an
extremely difficult situation."
In the letter, the prime minister is urged to influence US policy in the Middle East as "a matter of the highest urgency".
On Iraq, Mr Blair said: "There are Iraqi ministers here in London, now, today, who will tell you why the Iraqi people passionately need our support and help to get to democracy so that their country is not run by a dictator like Saddam or by fanatics and terrorists."
And Mr Blair said balance was needed in considering the situation of the Israelis and Palestinians.
"It's important... we accept and recognise that the suffering of the Palestinians is appalling and we need to change that but we also accept that there are innocent Israeli civilians being blown up by suicide bombs and terrorist acts."