Al-Qaeda remains a "serious threat" to the UK and its interests, say MPs.
The threat to the UK was shown by the bombing in Qatar, say MPs
But they also called on the government to make its position clear on the practice of sending terror suspects to countries with lax laws on torture.
Ministers should stop "obfuscating" over the CIA practice of "extraordinary rendition" in the war on terror, said the foreign affairs committee.
MPs also called on the UK government to be more critical of Guantanamo Bay now the British detainees had been freed.
"The government need no longer keep its diplomacy quiet in the interests of increasing leverage over individual cases," said the Foreign Policy Aspects of the War against Terrorism report.
MPs also warned the threat posed by al-Qaeda may have become harder to tackle since 11 September.
Iraq had become a "dangerous training ground for terrorists", similar to the old Afghanistan, the wide-ranging report on aspects of terrorism said.
It also urged ministers to "come clean" on whether Britain uses intelligence extracted under torture abroad.
The report said the threat to the UK was shown recently by the suicide car bomb attack in Doha, Qatar, where there had been no attacks previously.
A British man was killed and 12 people were injured after the bomb exploded outside a theatre packed with Westerners on 20 March.
The committee, which scrutinises Britain's foreign policy, also said excessive use of force by US troops in Iraq has "antagonised Iraqi civilians" and made the country more difficult to rebuild.
It said foreign fighters had played a leading and deadly role in the insurgency in Iraq.
But it said the evidence suggested the greater part of the violence stemmed from Iraqi groups and individuals, some motivated by religious extremism, and others dispossessed by policies adopted by the coalition since the war.
The report criticised coalition planning for the Gulf conflict and said the slow pace of reconstruction had fuelled the insurgency.
The MPs also said that states such as Iran and Syria were not taking sufficient steps to prevent terrorism either in neighbouring Iraq or in Israel and the Palestinian Territories.
They recommended that the government continued to make it clear to these states they must end all support and assistance for terrorist groups and take steps to stop their territory from being used by them.
The MPs said Britain must come clean over whether it uses intelligence extracted under torture by foreign countries.
The foreign affairs committee acknowledged there were "compelling" arguments for acting on information about possible terrorism.
But the committee added it was "surprising and unsettling" that ministers have twice refused to say whether they act on such information.
Ministers must also speak out against the detention of foreign suspects in Iraq, Guantanamo and Afghanistan, the report said.
It said the UK should strengthen diplomatic relations in Africa, citing Algeria, Morocco and Libya.
These countries were vital in the war on terrorism, but until now have not been a priority for the UK, it said.
But now co-operation and assistance was needed, while the European Union as a whole should review its policies towards these countries on its doorstep, the MPs concluded.