The former MI5 director general sensationally accused the government of stoking fear of terrorist attacks to justify assaults on civil liberties.

In an outspoken interview, she said that government anti-terror laws risked achieving the precise object of terrorism - to force citizens to "live in fear and under a police state."

The security service veteran, who stepped down in 1996, said: "Since I have retired, I feel more at liberty to be against certain decisions of the government, especially the attempt to pass laws which interfere with people's privacy.

"It would be better that the government recognised that there are risks, rather than frightening people in order to be able to pass laws which restrict civil liberties, precisely one of the objects of terrorism - that we live in fear and under a police state."

Dame Stella made her comments in an interview with Spanish newspaper La Vanguardia earlier this month, which was published by the Daily Telegraph yesterday.

She has been a harsh critic of government security policies such as attempts to extend pre-charge detention for terror suspects to 42 days and the controversial ID cards plan.

Civil rights campaign Liberty director Shami Chakrabarti said: "Dame Stella's remarks are completely in keeping with the public sentiment that government has been too careless with our hard-won rights and freedoms. When even the security establishment joins the chorus of concern, it's high time politicians started listening."

An Amnesty International UK spokeswoman added: "Stella Rimington is right to speak out. Britain's 'war on terror' policies have undermined the right to a fair trial and the global ban on torture.

"It's time for a fresh approach to the threat of terrorism, one that remains within the rule of law. We should counter terror with justice."

Dame Stella also attacked the US torture camp at its Guantanamo Bay naval base in Cuba, saying: "The US has gone too far with Guantanamo and the tortures. MI5 does not do that.

"Furthermore, it has achieved the opposite effect - there are more and more suicide terrorists finding a greater justification."

However, the Guardian newspaper published court evidence on Tuesday given by an anonymous MI5 operative that the service had questioned British detainees after they had been tortured by Pakistani intelligence agents.

A Stop the War Coalition spokesman said: "Detention without trial, implication in cases of torture, support for Guantanamo Bay and continuing attempts to victimise sections of the Muslim community are disastrous for civil liberties in Britain.

"Unfortunately, the organisation that she was formerly head of has been centrally involved in some of these policies."

On Monday, a report by the International Commission of Jurists in Geneva issued a similar warning that "many states have fallen into a trap set by terrorists" by introducing measures which undermine the values they seek to protect.

The panel warned that exceptional "temporary" counter-terrorism measures are becoming permanent features of law and practice.