The respected Royal Institute of International Affairs (RIIA) said the invasion of Iraq and its bloody aftermath had boosted recruitment and fund-raising for al-Qaida, suspected of being behind the London bombings on 7 July.
Police said on Monday the toll from the London underground train and bus bombings had risen by one to 56.
The RIIA report was issued as Interior Minister Charles Clarke met opposition party leaders to seek a consensus over tougher anti-terrorist legislation.
The government is due to meet members of Britain's Muslim community on Tuesday to discuss responses to the bombings.
On Monday, imams from about 500 British mosques issued a fatwa, or edict, condemning violence and presented it to politicians at Westminster. The fatwa will be read out at mosques during prayers this Friday.
The government is planning new
laws aimed at stopping 'terrorism'
Officials say the government is looking to target extremists, particularly Muslim clerics, who glorify or encourage terrorist acts. Such figures could be banned from entering Britain or deported if they are already in the country.
The government also wants to outlaw "acts preparatory to terrorism", such as giving or receiving training for attacks.
Clarke said he and his opposite numbers had agreed to publish legislation in October with a view to passing it into law by the year's end.
"We will cooperate with the government to ensure that the legislation ... does the job it is set out to do and it is put on the Statute Book as quickly as possible," opposition Conservative home affairs spokesman David Davis told reporters.
Police searching for a support network of planners, bomb-makers and financiers, say they have found no indication the explosives carried timers, meaning they were manually detonated by the four bombers.
Three were young British Muslims of Pakistani descent. The fourth was a Jamaican-born Briton.
Straw rejected links between the
Iraq war and the London attacks
Pakistani immigration officials said three of the bombers entered Pakistan through Karachi last year.
Several suspects have been detained in Pakistan since 7 July although no link had been established.
Prime Minister Tony Blair will meet British Muslim community leaders on Tuesday to find ways of tackling the root causes of terrorism and preventing extremism.
"We all have to recognise where this perversion of Islam comes from," Blair's spokesman said. "We all have to stand together and deal with it. That includes the Muslim community."
The RIIA said Britain had created its own problems by playing "pillion passenger" to Washington.
"The UK is at particular risk because it is the closest ally of the United States," said security experts Frank Gregory and Paul Wilkinson.
That provoked a strikingly robust rebuttal from Britain, the United States and Australia.
"The time for excuses for terrorism is over. The terrorists have struck across the world, in countries allied with the United States, backing the war in Iraq, and in countries which had nothing whatever to do with the war in Iraq," Foreign Secretary Jack Straw said in Brussels.
"The UK is at particular risk because it is the closest ally of the United States"
Security experts Frank Gregory and Paul Wilkinson
In Washington, US Defence Secretary Donald Rumsfeld and Australian Prime Minister John Howard challenged any notion that a country could be made safer from terrorism by avoiding confrontation.
"I think that people who think that terrorists pick and choose discriminately don't understand how it works. The United States had done nothing on September 11 when it [the attack on the US] was done," Rumsfeld said.
"People who think they can make a separate peace with terrorists will find that it's like feeding an alligator, hoping it eats you last," the defence secretary said at the Pentagon with visiting Howard.
"I have a similar view," said Howard. "No country can allow its foreign and defence policy to be malleable in the hands of terrorists."