A war with Iraq could destabilise the Islamic world and boost recruitment to al-Qa´eda and other terrorist groups, according to an influential committee of MPs.

The Commons foreign affairs select committee said yesterday that while Saddam Hussein could not be allowed to continue to defy the United Nations, Britain and America should not underestimate the impact of war on Arab public opinion.

Despite vigorous international efforts to disrupt Osama bin Laden´s terrorist network, and even before any conflict with Iraq, al-Qa´eda continued to pose a "grave threat" to Britain and its interests around the world.

In its report, the committee expressed concern that Jack Straw, the Foreign Secretary, appeared "surprisingly unconcerned" about the potential repercussions of an American-led military action against Iraq.

"We do not share Mr Straw´s confidence that, in the event of military action against Iraq, the US and UK would be able to justify such action to the satisfaction of the ´Arab street´.

"The Foreign Secretary has presented a case for robust action to enforce Iraqi disarmament which seems reasonable enough to many British citizens, but which will likely appear less so to disaffected young people in Egypt, Yemen or Saudi Arabia - especially if, as is likely, images of Iraqi civilian casualties are broadcast by the al- Jazeera television station and other pan-Arab news services.

"We recommend that the Government treat seriously the possibility that a war with Iraq could trigger instability in the Arab and Islamic world, and could increase the pool of recruits for al-Qa´eda and associated terrorist organisations there and in western Europe."

The committee said it had been warned of a "real danger" of street fighting in Iraqi cities and the likelihood of heavy casualties in the event of war with Iraq.

By concentrating troops in the cities, Iraq could force America and its allies to attack major centres of population. Such a tactic could significantly increase the risk of both civilian and American or British military casualties. In the event of an American-led attack on Iraq in which British forces participated, there was a more immediate threat to Britain´s interests than boosting al-Qa´eda recruitment, the MPs said.

There was "compelling" evidence of Iraq´s retention and continued development of weapons of mass destruction, and failure to address that threat could pose "very high risks" to British interests in the Middle East.

In Scotland, Jack McConnell warned that the risk from terrorist activity remained high and asked people to exercise vigilance. However, the First Minister said there was no need for panic as the arrest of seven suspected terrorists showed that police and security forces were protecting the public north and south of the border.

The seven men of North African origin, three detained in Edinburgh and four in London, were questioned by detectives yesterday at a high- security police station in the Govan area of Glasgow.

The arrests, following early morning raids on four flats, were the first in Scotland under the Terrorism Act since the September 11 attacks last year.Mr McConnell said: "All the indications are that although there are no specific threats to Scotland, the level of risk from terrorist activities is high. People should exercise normal vigilance in their day-to-day lives."

Lothian and Borders Police said the men could be held for up to 48 hours, after which a superintendent who was independent of the inquiry would have to apply to extend their detention for up to five days. (© Copyright of Telegraph Group Limited 2002. 12/20/02)