Politics - John Kampfner reveals an Anglo-US split

Britain feels betrayed by America over Israel. When Sharon wrecked the proposed conference in London

The irony is lost on no one in Whitehall. As the Prime Minister readies the troops for war against Iraq as George Bush's junior partner, relations with the White House have fallen to a new low.

The anger in Downing Street at Israel's scuppering of the London conference on Palestinian reform, and the contempt with which the Israelis phrased their decision, has left Tony Blair's people angry and dazed. What upset them most, however, was the "duplicitous" role, as one of them put it, of the US government. "It's not the Israelis who are the real problem, it's the Americans," said a senior British official. That view was shared by several ambassadors who had flown in to London for a two-day gathering on the future of British diplomacy.

Those around Blair are asking themselves the same question: what is the point of the so-called special relationship if we can't cash in the credits when we want to?

When Blair announced to the Labour conference last October that he wanted final settlement talks on the Israeli-Palestinian conflict to be held by the end of the year, Bush, as I then reported, phoned him to give him a "friendly" piece of his mind. The idea was gently dropped, only for the PM to announce the convening of a conference in London involving the Palestinians, other Middle Eastern countries, the EU, the UN, Russians, Americans, but not the Israelis, on "democratising" the Palestinian authority.

Bush and the hawks weren't amused. Even the usually amenable Department of State was lukewarm. The Americans saw it as little more than face-saving for Blair, but were prepared to indulge him. But as a senior US official put it to me: "You stand a risk if you hold a conference simply to hold a conference."

The suicide attacks on 5 January gave the Israelis a pretext for stopping the Palestinian delegation from travelling to London and for Binyamin Netanyahu, the hardline foreign minister and pretender to Ariel Sharon's throne, to settle scores with Blair. Although Colin Powell, the US secretary of state, phoned Netanyahu to urge him to reverse his decision about the conference - "we'd like to have seen it happen" - he was only going through the motions. I am told the Israelis received a nod and a wink from the US Department of Defence.

Netanyahu has a particular animus against Britain dating back to Robin Cook's trip to the Har Homa settlement in 1998. Netanyahu, who was then prime minister, cancelled a meeting with Cook in protest. British diplomats have since fought hard to conceal their dislike for Likud's sharp-tongued operator. When Netanyahu visited London last month, Blair found he was too busy to see him. A slot in the PM's diary was, however, found for a meeting with Israel's Labour leader, Amram Mitzna, at Downing Street on 9 January, only weeks before the Israeli election.

Privately, the British acknowledge that Mitzna almost certainly cannot win - the bombs in Tel Aviv make his task even more difficult - but they believe a strong showing for Labour in Israel would give the peace process a belated boost.

The Americans, it is enough to say, don't see it that way, and while they might not like Sharon personally, they see him as "sound" on terrorism.

Beyond point-scoring, there is a chasmic disagreement between London and Washington. The Americans take the view that there is no point in discussing Palestinian reform until Yasser Arafat goes and the suicide bombing ceases; the British argue that the violence won't end until the Palestinians see evidence of political progress.

This was one of the more salient points in Blair's revealing speech to the great and good of the Foreign Office on 7 January. He turned to a device he frequently uses - quoting others to make points that he would love to make himself. "The reason there is opposition over our stance on Iraq," Blair said, "has less to do with any love for Saddam but over a sense of double standards" in our approach to the Middle East peace process.

Blair prods Bush ever so gently. His aides are mindful of the extent of his influence. "When Tony talks to Bush, when he suggests the Americans might be getting it wrong on Israel, the message sinks in for a couple of days but is then forgotten," says one senior official.

Downing Street wanted the speech to be seen as a warning to Bush that, although Britain would "remain the closest ally of the US", Blair would fight the Iraq war - any war - on his terms.

That was music to the ears of diplomats, who fear the "poodle" tag is limiting their room for manoeuvre and damaging Britain's credibility.

Tellingly, in the closed question-and-answer session after Blair's speech, one ambassador asked the PM "whether it mightn't be a bad idea if we could disagree with the Americans a bit more publicly".