No 10 has hit back after Charles Kennedy said Tony Blair should not be surprised if links are drawn between the Iraq war and the London bombings.
Kennedy says the Lib Dem position on Iraq was 'principled'
The Lib Dem leader said there was no "causal link" between UK action in Iraq and last week's attacks in London.
But British involvement in the invasion could be used by terrorists to increase violent fundamentalism, he said.
Downing Street branded his comments as "naive". Shadow minister Julian Lewis said they were "deeply irresponsible".
Mr Kennedy made the comments during a speech on internationalism at London's Institute of Contemporary Arts.
He claimed the war on Iraq was the "biggest foreign policy mistake" for a British government since Suez.
The way the allies went to war in the first place, as well as "the mismanagement of the aftermath have fuelled the conditions in which terrorism flourishes", he said.
One of the key parts of the intelligence advice from the Joint Intelligence committee before military action was that the threat of terrorism "would be heightened, not diminished, by war in Iraq", he said.
He said: "I am not here implying some causal link between Britain's involvement in Iraq and the terrible terrorist attacks in London last week.
"Not at all. The mass murderers who attacked London last week did not need Iraq as an excuse.
"The blame for the deaths in London falls firmly on their shoulders and on their shoulders alone."
But he said: "Those like President Bush and Tony Blair, who have sought to link Iraq with the so-called 'war on terror' can hardly be surprised when members of the public draw the same link when acts of terrorism occur here in the United Kingdom."
He added: "But we have to recognise the occupation of Iraq by the multi-national force itself contributes to the insurgency and attracts those from abroad who see the opportunity to spread violent fundamentalism."
The prime minister's official spokesman appeared to criticise Mr Kennedy's comments.
He pointed to terror attacks before the invasion of Iraq. "I think it is naive frankly to believe that you can say that that kind of terrorism is due to the Iraq war," he said.
"It existed before Iraq, the organisation, the mindset that supported that kind of terrorism existed before the Iraq war, and therefore to put it down to the Iraq war, I think, is misplaced."
He added: "Nobody should do anything that suggests that there is any responsibility for the London atrocities other than by those who carried them out."
Conservative shadow defence minister Mr Lewis said it was not the Iraq war which started acts of terrorism by al-Qaeda.
"What he seems to be saying is keep your head down and hope you will not be attacked as long as you do nothing to offend the terrorists," he said.
Mr Lewis said: "Churchill said appeasement was a policy of throwing others to the alligator in the hope that it will eat you last. That appears to be Mr Kennedy's policy.
"That is exactly the policy of appeasement people used to use in the face of threats from totalitarian movements in the 1930s.
Veteran Labour MP David Winnick said it was important politicians and especially leaders of political parties were "careful".
He said: "Otherwise the impression may be given, however much they would wish otherwise, that terrorists have a justified cause.
"The fact of the matter is even without Iraq there would be other reasons why terrorists would strike at this country."