UK troops should withdraw from Iraq as soon as they have trained local forces - regardless of the security situation, a group of senior politicians has said.
Lord Ashdown felt Tony Blair had not used his leverage with the US
The US-led coalition has "no easy options left, only painful ones", a report by the Iraq Commission stated.
Commission chairman Lord Ashdown said the coalition had suffered from "ridiculously over-ambitious" goals, and had become a target for violence.
Ministers have repeatedly declined to put a timetable on troop withdrawal.
Foreign Secretary David Miliband said he would assess the commission's report "in the sober way it requires".
The commission, set up by Channel 4 and the Foreign Policy Centre think tank, took evidence from a series of interested parties and made a number of recommendations in its 119-page report.
Lord Ashdown, who co-chaired the commission with Baroness Jay and former Defence Secretary Lord King, said that coalition forces could no longer suppress the violence.
"We are, in a sense, a target for the violence, and therefore we need to hand this process over to the Iraqis," he told BBC One's Sunday AM programme.
"We committed the cardinal sin of these interventions, which is to have ridiculously overambitious aims."
He said the coalition had tried "to re-create Washington in Baghdad, to re-create a fully-functioning western-style democracy in a Middle Eastern country".
The former Liberal Democrat leader added: "Our withdrawal rate should be determined not by the security situation - which allows the militias, the insurgents, to determine our withdrawal - but by the state of training of the Iraqi forces."
He said former prime minister Tony Blair had "failed to use the leverage" he had to influence US President George W Bush's policy in Iraq.
Shadow foreign secretary William Hague said politicians in Iraq must prepare to take control of their country.
"Iraqi politicians themselves are still not doing enough to achieve the crucial reconciliation within their country," he said.
"That is really what now their future depends on, because I don't think there is any military solution to the problems of Iraq still available."
The commission's report recommends that the UK should "actively and urgently... pursue changes of policy from our allies".
Among the report's recommendations were:
The UK, along with the US and EU, should initiate a "diplomatic offensive" to stabilise Iraq's borders
The prime minister should seek the appointment of a high-level UN envoy to facilitate political reconciliation within Iraq
No timetable for withdrawal should be set, but a pull-out "will happen as a consequence of the completion of training activity"
The British government should pass legislation regulating private security firms operating in Iraq
The UK should support the creation of a free media through NGOs such as the BBC World Service Trust.
Fresh waves of violence have hit Iraq over the weekend, with nine people dying in a village near Hilla, south of Baghdad, after gunmen raided a house.
A car bomb in the capital killed six and injured 15 more, and the US military reported that it had killed six suspected insurgents in an air strike near Baquba, north of Baghdad.
In his weekly radio address, President Bush said his troop "surge" strategy needed more time to work.
He said the last contingent of the 30,000 extra troops had only just arrived and needed time to carry out their mission.