Parliament's intelligence and security committee has accused MI5 of making a "serious misjudgement" in its failure to warn travellers of the threat posed by terrorists in Indonesia prior to October's Bali bombing.

The all-party committee said officials should have recognised that British tourists on the island were at risk.

"The intelligence from September 2002 reported that attacks on US and UK interests, including tourists in nightclubs, were being discussed by terrorists," found the committee.

The FT reports that MI5 insiders were angered for being blamed even though the committee accepted there was nothing the UK could have done to halt the attack.

In response to the findings, foreign secretary Jack Straw announced a review of the system for issuing advice to travellers.