The shadow foreign secretary has accused ministers of a series of embarassing gaffes over Libya.
Douglas Alexander said a mission to the country that ended over the weekend with British soldiers and a diplomat being taken into custody by rebel Libyan forces was just "the latest setback for the United Kingdom".
He said there are "serious questions" about the government's grip on the situation in Libya and their response to events.
Foreign secretary William Hague admitted that there was "a serious misunderstanding" about the operation, which involved heavily armed SAS troops and a British diplomat, that led to their "temporary detention".
The eight-strong team were withdrawn yesterday.
Hague paid tribute to them and said they were able to meet the head of the interim national council in Benghazi on Saturday.
He defended the decision to send British representatives in to meet with those rebelling against the Gaddafi regime.
"This engagement is vitally important to gain a better understanding of the political, military and humanitarian situation on the ground," he told the Commons.
Douglas Alexander, the shadow foreign secretary, said the failed diplomatic mission was another example of "serial bungling".
He cited Hague's claim that Gaddafi had fled to Venuzuela, ministers being "late" in securing charter planes to transport British nationals out of the country and in convening Cobra and the PM's public assertion that a no-fly zone may be imposed.
Alexander asked why the rebels had not been informed of the diplomatic mission and asked if Hague would greet new neighbours in his street by ringing their doorbell or climbing over their fence in the middle of the night.
On the no-fly zone, Hague said the situation is as stated by the prime minister last week, namely that contingency planning should be done.
He said he takes full ministerial responsibility for the failed mission, but pointed out that British troops were sent in to Libya last week to rescue UK nationals and that mission was a success.
Hague said the UK is leading the way in seizing the assets of Gaddafi and his regime and in calling for action at the UN.
Former foreign secretary Malcolm Rifkind (Con, Kensington) warned that a no-fly zone would need to be supported by the Libyan rebels as it would involve "a very substantial degree of Western military involvement".
Hague said there would have to be a demonstrable need for a no-fly zone, a clear legal basis and support from the regional powers and the Libyan people.
Sir Ming Campbell (LD, NE Fife) said it is clear the mission was "ill-conceived, poorly-planned and embarassingly executed".
Richard Ottoway (Con, Croydon South) said recent attempts at a no-fly zone, such as in Bosnia, were ineffective.
Denis Macshane (Ind, Rotherham) said the impression that the UK is a leader in this crisis "exists only in the foreign secretary's head". He asked Hague to consider his position.
Margot James (Con, Stourbridge) said that a strong civil society in Libya and other countries in the region can only come about when women have greater equality.
Bob Stewart (Con, Beckenham) said if the UK got involved in a no-fly zone it would have to be willing to shoot down planes and helicopters and attack anti=aircraft targets in Libya.
Bernard Jenkin (Con, Harwich and North Essex) told Hague he should take credit for operations that go right as well as those that go wrong.
Rory Stewart (Con, Penrith and the Border) called for the creation of an escrow account to hold Libyan oil revenues.
Hague said he will continue to look at all options and said the UK has stopped the export of more than £1bn of bank notes to the Gaddafi regime.
Barry Gardiner (Lab, Brent North) asked why the team sent to Libya had fake passports.
Andrew Love (Lab, Edmonton) said the incident raises questions about Hague's judgement, while Yasmin Qureshi (Lab, Bolton SE) and Toby Perkins (Lab, Chesterfield) called on the foreign secretary to apologise to the House.
Ben Wallace (Con, Wyre and Preston North) said the Gaddafi regime gave up its nuclear programme but asked if it still retains mustard gas.
Hague said that is "true, as far as we know".
He added that the contact made by the team sent in with the president of the rebel council "will form the basis of further contact".
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