The international aid effort is driving up living standards for many Iraqis despite on-going security concerns on the ground, Hilary Benn has told MPs.

In a Commons statement the international development secretary conceded that security remains a "continuing concern" particularly in and around Baghdad.

But he insisted that the situation was more stable in the northern provinces and the south east of the country, where many British forces are based.

"For most Iraqis, life is gradually improving," the minister told MPs.

Electricity supplies were last month above pre-conflict levels and food distribution "is working" throughout most of the country.

A total 1,500 schools have been refurbished with attendance rates returned to pre-conflict levels.

Almost all of the 240 hospitals are now up and running, the House was told.

The supply of fuel for domestic use is meeting demand, added the minister.

Benn announced that 40,000 police officers are now back in work and "criminal justice is being restored, but without the terrible oppression that characterised Saddam's regime".

"The Iraqi people deserve the chance they now have for a better future. They have waited for it long enough," he said.

"Much... should be done in security, to counter the violence of Saddam loyalists and others who want to deny the Iraqis this chance," he said.

"But the best way we can prevent them from succeeding is to continue with the reconstruction and the political change."

"That is why we must all remain committed to the economic and social reconstruction of Iraq, and a better life for its people."

Newly-appointed shadow international development secretary, John Bercow, said some real and particular problems remained inside the country.

He called for the urgent rebuilding of a spinal injuries unit which was damaged when the United Nations building was attacked.

Taking immediate action "would show the people of Iraq that we were genuinely committed in practical terms, through deeds as well as words, to their successful and secure future", said Bercow.

"No-one in this house doubts the decency of his intentions, but many people in this house and throughout the country doubt the capability of the government to deliver in deeds what it has promised in words," he added.

"And it is difficult to escape the conclusion...that while government ministers prevaricate in Westminster, the people of Iraq are desperately trying to get on with their lives.

Bercow said the prime minister had shown "courage and statesmanship" in the conduct of war.

But he went on to accuse ministers "of dither and abdication of responsibility" in failing to prepare for the peace.

Liberal Democrats highlighted the transfer of aid from other projects in middle income countries to the reconstruction of Iraq.

"One of the unintended consequences of the reconstruction of Iraq...is the diversion of funds away from middle income countries," said international development spokesman Tom Brake.

"Can he explain why these projects, which were deemed priority projects previously, are no longer so, and does he believe, as I do, that the people in Romania and Egypt, for instance, will find it hard to understand the reasons why they are having to pay for reconstruction in Iraq."

"Clearly, Iraq's future hangs in the balance, and I do urge the secretary of state to use his office to ensure Iraq does not descend into chaos, which would be a great loss to Iraqi citizens," he added.