Sir Christopher Meyer said in an interview with The Guardian newspaper on Saturday that he disagreed with Prime Minister Tony Blair's claim that the war had not exposed Britain to terrorist attack.
"There is plenty of evidence around at the moment that homegrown terrorism was partly radicalised and fuelled by what is going on in Iraq," he was quoted as saying.
"There is no way we can credibly get up and say it has nothing to do with it. Don't tell me that being in Iraq has got nothing to do with it. Of course it does."
Britons were horrified to discover that a series of bombings in London on 7 July that killed 56 people - including the four bombers - were carried out by young Britons of African and Asian descent.
The attack was the deadliest in Britain since the second world war.
Meyer, who sat in on crucial meetings between Blair and US President George Bush in the buildup to the war, is about to publish his memoirs of his time in Washington.
He is now chairman of a media watchdog, the Press Complaints Commission.
Meyer said that, although he felt it had been right to go to war in Iraq, he was unhappy about the handling of the aftermath.
Fifty-six people, including four
bombers, died in the London attacks
"I don't believe the enterprise is doomed necessarily, though ... it does not look good. A lot of people think what we are going to end up with is precisely what we didn't want," The Guardian quoted him as saying.
Meyer said there had been "a massive amount of wishful thinking" in Washington that led to a lack of planning for what would need to be done after the ouster of Saddam Hussein.
But he said he was opposed to an early pullout of US and British troops, saying that to abandon the task of rebuilding Iraq now would leave "the relatives of at least 2000 American servicemen and 98 British servicemen (who died) with a legitimate question about what they died for".