Checks on power of No10 'sofa Cabinet'

Wholesale reforms of the way the intelligence services and Whitehall work are being drafted today.

A Civil Service Bill is now expected to be published in the autumn to kill off, once and for all, claims that Tony Blair's aides can operate unchecked by ministers or officials.

More key meetings are to be minuted by civil servants in response to Lord Butler's criticism of the "sofa Cabinet" style of Downing Street that operated in the run-up to war on Iraq.

Under a raft of measures taken in response to the Butler report, extra staff and funds will be allocated to MI6 and the Defence Intelligence Staff as part of the Chancellor's ?500million boost to the security budget.

The Cabinet Office's 30-strong assessments staff, the team criticised by Lord Butler for repeated blunders on Iraq, is also likely to see a boost in its numbers. The moves emerged as pressure continued on John Scarlett today to withdraw from his appointment as the head of MI6 next month.

Tony Blair was himself in the line of fire again as the fine detail of Lord Butler's inquiry into Britain's intelligence on Iraqi weapons emerged.

Mr Blair was warned by outgoing MI6 chief Sir Richard Dearlove about the Iraqi informant responsible for the claim that Saddam was still producing chemicals for use in weapons.

Sir Richard told Mr Blair on 12 September, 2002, more than a week before Downing Street published its dossier on Iraq, that the case was "developmental" and the informant was on trial and "remained unproven". Despite this warning, Mr Blair seized on the Iraqi source's suggestion that Saddam was continuing to arm himself. Major errors in the runup to war also included a failure to take note of previous spying assessments that pointed out there was little or no hard intelligence to suggest Saddam had chemical or biological weapons.

Two new memos unveiled by Lord Butler, Joint Intelligence Committee assessments showed just how thin the intelligence was before the Government published a dossier on the Iraqi threat.

One said: " We know little about Iraq's chemical, bio weapons work since late 1998." The other revealed that one raw intelligence report "suggests that Iraq has 'lost' the capability to develop warheads capable of effectively disseminating chemical and biological agent".

As well as a Civil Service Act, the Government is gearing up for renewed criticism of Mr Blair's cosy style of policy making and procedures. Lord Butler yesterday criticised his decision to create a post of Security and Intelligence Coordinator who effectively sidelines the Cabinet Secretary in security matters.

Downing Street is also to face a fresh probe over its lack of Cabinet government as the all-party Intelligence and Security Committee launches a review to check whether the Cabinet Secretary has been cut out of important decisions.