Blair changed key passages on possible action against Iran, climate change, and a proposed shake-up of the International Monetary Fund and the World Bank on Friday when he delivered his landmark address at Georgetown University in Washington during his trip to the United States, the report said.

Objections by U.S. President George W. Bush's inner circle played a key role in the alterations of Blair's address, said the newspaper, according to British sources.

Only three hours before the speech was delivered, Downing Street officials were briefing journalists that Blair would stress that "change should not be imposed" on Iran, reflecting the British view that bombing or invading Iran is not a realistic option.

American officials had insisted, however, that the possibility of military action remained "on the table," arguing that this helped to exert maximum pressure on Iran.

By the time he made his speech, Blair had significantly bowed to the American position, claiming "I am not saying we should impose change" and leaving the door open for a military attack, the report said.

According to the report, most U.S. officials privately support the British position and aides to both leaders concede that with their personal poll ratings plummeting neither has the political capital to attack Teheran. There are signs that Bush also recognizes this.

During his speech, Blair also backed away from a planned demand for a change in the running of the world's biggest financial institutions, the International Monetary Fund (IMF) and the World Bank.

Blair originally intended to spell out a plan for Europe and the United States to give up their exclusive rights to install their own nationals as heads of the bank and the IMF respectively.

This would help to persuade smaller nations to give up their effective right to choose the United Nations secretary general, in favor of a move to install a leading international figure. Instead, Blair glossed over the issues, merely citing a "powerful case for reform."

As for global warming and the Kyoto Treaty, which Washington still has not signed, Blair said, "We must act on climate change," but did not go into detail.