LONDON, 7 November 2005 — British Prime Minister Tony Blair signaled a humiliating climbdown over anti-terror laws yesterday in what will be seen as a further blow to his dwindling personal authority, which was hit by the resignation of Work and Pensions Secretary David Blunkett.

Blair is also facing a fresh row after claims that a second member of his Cabinet breached the code of conduct with Tessa Jowell, Secretary of State for Culture, Media and Sport, being accused of breaching the code that last week forced Blunkett to quit.

The real blow came from within Labour with many MPs threatening to vote against Blair if the premier toughed it out on the terror bill. Senior Downing Street sources said that although the premier remains personally convinced that allowing police to detain suspects for up to 90 days without trial is essential to combating the threat from Al-Qaeda, he has now accepted that in the present political climate he will have to compromise.

Without a change, Blair faced the prospect of his first defeat in the House of Commons this week, with MPs warning that he would have to quit if he lost and the Tories threatening to shoot down the entire anti-terror legislation. He was also facing protests within his own Cabinet.

In an unusual step, No. 10 has withdrawn from negotiations on the controversial 90-day rule and left the Home Secretary Charles Clarke — who is understood to have protested that rejecting a deal would put him in an impossible position — to find a compromise.

Blair hopes that the move will reassure angry Labour MPs who were likely to scupper the bill, which will be put to the vote on Wednesday. “The prime minister understands there is likely to be a compromise, but that doesn’t mean to say he does not believe that the 90 days is the right decision,” said a Downing Street source. “The most important thing is getting the legislation on the statute book. If you can’t get the 90 days through (Parliament), there has to be a negotiation. That does not mean we then say the outcome is the right one — it’s the only one we can get through.”

The Home Office will also offer concessions this week over separate plans to criminalize religious hatred — bowing to demands from peers for safeguards to protect freedom of speech — and over proposals in the terror bill to outlaw the glorification of terrorism, introducing new safeguards making clear what would trigger a prosecution.

The messy fudge has intensified private discussions between senior MPs over speeding up the transition of power from Blair to Gordon Brown, in the hope of avoiding a running skirmish in the Commons like those which destabilized John Major, the last Conservative premier. Major joined the assault by accusing the government of being more dishonest than his own, adding it had “not only had more of what loosely one might call ‘sleaze’ but it was closer to the PM.”

Meanwhile, details revealed that Jowell might have failed properly to disclose details of her husband’s business dealings in Iran. It has now been confirmed that Jowell disclosed her husband’s work for the Iranian company ILTC only on May 2, 2003. This was the same day that The Observer contacted her husband, corporate lawyer David Mills, to ask him about the business.

Mills had been advising the company for at least a year and had traveled to Tehran on business. In July 2002, he wrote to then Foreign Office Minister Baroness Symons asking for her help in securing a £125 million aircraft deal that fell foul of US law. Mills wanted to see if there was a legal way to avoid the US trade sanctions that prohibited the sale of aircraft to Iran.

Both the opposition Conservatives and Liberal Democrats have said the revelation about Jowell suggests she has breached the ministerial code.