The prime minister has condemned a speech by the Conservative leader which accused him of "designer diplomacy" that puts Britain's security at risk.

In his first major speech on foreign affairs, Iain Duncan Smith launched a wide-ranging attack on Tony Blair's vision of a "new world order" in global affairs in the wake of last September's terrorist attacks on the US.

But Tony Blair strongly rejected the claims, describing himself as "astonished" that they could be made on the day the interim Afghan leader Hamid Karzai was visiting London.

In his speech to the Royal Institute for International Affairs in London, Duncan Smith said that while he would support the government when it was acting in the national interest, the "world view" underpinning Labour's philosophy was "political folly" that threatened Britain's security.

"Today's utopian internationalists, who only have to glance at an opportunity for multilateral intervention in order to jump at it, run the risk of weakening national support for those military engagements which are fundamental to our security.

"Moreover, they fail to recognise that it is only when nations consider that their vital interests are engaged that they will make those sacrifices and shoulder those commitments that lead to successful outcomes," he said.

Britain's armed forces risked being over-stretched, he warned, by an expanding number of commitments. "We cannot hope to do more in the world and yet spend less on it. That's called facing up to reality."

In a speech that had repeated warm words for America's leadership and Britain's "special relationship" with "our American friends", Duncan Smith urged the government to back president Bush's controversial national missile defence plan.

"I believe that the British government should have given stronger support to president Bush's plans and led the debate here in Europe," he said.

And in an implicit criticism of Tony Blair's visit to India and Pakistan earlier this month, Duncan Smith said leaders should first consider what they expect to achieve, the practical means at their disposal and whether they are best placed to achieve the desired outcome before engaging in international diplomacy.

"Without clarity on these points, the correct conclusion may be to stay at home."

Duncan Smith also rejected suggestions that his policies would lead to Britain withdrawing from engagement with the rest of the world.

"That is not an isolationist principle: quite the reverse - it is precisely because our national interest is bound with the interests of other civilized nations that we must pursue a vigorous foreign policy. But we must always have a clear understanding of our mission."

Tony Blair issued a stinging rebuke to Duncan Smith's remarks.

Speaking during his press conference with Afghan interim leader, chairman Hamid Karzai, the prime minister described Duncan Smith's comments as "astonishing".

"I can't think of a day that is less appropriate to make those types of remark, frankly," Blair told journalists.

"I think since September 11 it has become absolutely obvious to everybody that events in one part of the world can dramatically affect events in another part of the world," he said before accusing Duncan Smith of being an isolationist.

"What happened in America was not just as attack on America but on civilised values everywhere. It had an immediate impact on the world economy, world security everywhere and I think it's not just right but essential that Britain plays its role on the international stage, not just for the purpose of bringing about a better and more stable international community but also because the fact that Afghanistan was a failed state living on terrorism and drugs affected Britain.

"This idea that somehow we isolate ourselves from the rest of the world, we draw in upon ourselves, that Britain becomes a sort of reclusive figure trying to shield ourselves from what happens on the international stage - that is so wrong and misguided," said the prime minister.

The Conservative view of foreign affairs also came under strong attack from the Liberal Democrats. Menzies Campbell, the party's foreign affairs spokesman, said Conservative polices would leave Britain isolated.

"It has become increasingly clear that the only foreign policy which the Conservatives have is to be the provisional wing of the Republican Right in the US," he said.

"A Tory government would increasingly isolate Britain and remain locked in a quasi-imperial past. Britain can be a force for good, but we will be most effective operating through international institutions such as the EU, NATO and the UN."