"The supply of fuel products in the Baghdad area has dropped to critical levels," the document, seen by Reuters, said. "If the current situation does not improve quickly, public confidence in the government may deteriorate significantly."

It added that fuel distribution problems were leading to long queues at petrol stations, while there was still low access to electrical power.

But the document blamed Iraqi fighters for the lack of basic services that have plagued Baghdad since the US-led war in March 2003.

"The problems are the result of both insurgent and criminal activity," it said.

The document contrasts with public US statements that Iraqi electricity output is rising and that the country's oil facilities are steadily being restored 19 months after the US declared an end to major combat.

Fuel crisis deepening

Petrol sold on the black market
is charged at much higher rates

Traders say the winter season, damaged or destroyed pipelines, a lack of security on the country's roads and failure to contract imports to reliable suppliers has deepened fuel shortages that Iraq started suffering after last year's US-led invasion.

Iraq used to export refined oil products before the war. Imports now cost the country $200 million a month, with oil products coming by truck from Turkey, Iran, Jordan and Syria, and through the Khor al-Zubeir terminal on the Gulf.

Its demand amounts to about 20 million litres a day of petrol, half of which is imported.

Iraq also needs imports to cover domestic requirements for 20 million litres a day of gas-oil, most of it diesel, 8000 litres a day of kerosene and 5000 tonnes a day of liquefied petroleum gas.

Twenty litres of gasoline in Iraq now costs $14 on the black market compared with the official rate of 20 cents at the pumps, where supply is meagre and queues stretch for kilometres.

Households also lack kerosene and gas-oil for heating.