Iain Duncan Smith has derided the government's trade policy, asking Tony Blair to apologise to steel workers who could lose their jobs as a result of the US decision to impose tariffs on steel imports.

The Tory leader said the proposed tariffs were "wholly unacceptable" and argued that Tony Blair's support for Lakshi Mittal's Sidex steel firm had damaged British interests.

He told the Commons that Mittal had lobbied the US government for the introduction of tariffs on steel imports.

"We all know that the prime minister put the interests of his friends before the interests of the British people," said Duncan Smith.

"We have here a problem because the company he celebrated as a British company actually spent over $600,000 dollars on lobbying the United States government to impose tariffs on British steel imports."

Blair said that the government would "stand by the policy" of opposing the tariffs proposed by George W Bush.

"These are unacceptable and wrong and, of course, they affect not just Britain but the European Union and other countries around the world," said Blair.

"In our view the problems of the United States steel industry are best solved by restructuring, not by imposing arbitrary and unjustified tariffs."

But the prime minister said that he would "take no lectures from a Conservative Party which whilst in government destroyed 100,000 British steel jobs".

Hitting back, Duncan Smith said: "In case the prime minister hasn't noticed, he has been in power for nearly five years and during the course of that time nearly 400,000 manufacturing jobs have been lost. What he arrogantly dismissed as garbage gate some weeks ago is going to effect the lives of thousands of people."

"It seems that the only mistake that the steelworkers made was not to give enough money to the Labour Party," he added.

Liberal Democrat leader Charles Kennedy forced Blair on the defensive over transport and news that the Strategic Rail Authority had questioned Stephen Byers's estimate of how much the replacement for Railtrack was going to cost.

"This time last week the prime minister said to me that the transport secretary should be judged upon his record," he began before saying the travelling public, Byers own department and now the City had lost their confidence.

"Just what does it take for the prime minister to lose confidence in his transport secretary?" Kennedy asked.

Blair described Kennedy's remarks as "a piece of opportunism" adding "that would be highly unusual for the Liberal Democrats of course".

Rising for his second attack, Duncan Smith joined the fray.

He returned to the theme of transport replying to Blair's attack that the Conservatives would prefer to continue bankrolling a failing company.

"One difference between us is that I wouldn't have a transport secretary like this," before accusing Blair of being weak for refusing to sack Byers.