In a rare display of public disagreement, both chiefs of Israel's intelligence services over the past decade have voiced serious misgivings about key policies of Prime Minister Binyamin Netanyahu on Iran and the Palestinians.

At a lecture in Jerusalem last Friday, Meir Dagan, who served as head of Mossad for eight years before stepping down in January, called a military attack on Iran "a stupid idea". While saying that the emergence of a nuclear Iran was something that must not be allowed, he made it clear that "an aerial attack on the reactors is a stupid idea and brings no advantage. Whoever attacks in Iran must understand that he is risking a regional war in which Iran and also Hizbollah will launch missiles."

Instead, he said, "the Iranian problem must be cast as an international problem and we should continue acting to delay Iranian nuclear development."

This was Mr Dagan's first public appearance since leaving Mossad and the first time that any senior Israeli figure admitted publicly to the differences of opinion that have long been known to exist within the country's highest echelons.

Mr Netanyahu and Defence Minister Ehud Barak are understood to be supportive of bringing forward a possible attack on Iran, with the backing of senior officers in the air force and military intelligence, and are even going so far as to seek a "green light" from the American administration.

First time a senior Israeli has admitted to such profound differences of opinion

However, they have been opposed by Mr Dagan and former IDF chief of staff Gabi Ashkenazi, who have argued against the feasibility of such an attack and pointed out its regional implications. Their main backer has been President Shimon Peres, who while serving in a ceremonial role, is still regarded by many as the country's most experienced hand in strategic affairs.

American diplomatic cables published by WikiLeaks have detailed meetings between Mr Dagan and State Department diplomats in which the Mossad chief explained why he favours using a combination of diplomatic and economic pressure together with clandestine operations against the Iranian nuclear project.

In an attempt to play down the rift, the Prime Minister's Office did not officially respond, although sources there said Mr Dagan's words were "damaging".

Mr Barak said on Sunday that "it is not wise to share your thoughts with the entire public" and Finance Minister Yuval Steinitz, a close confidant of Mr Netanyahu, said "it was a superfluous statement".

Mr Dagan's lecture came only two days after a rare, on-record briefing by Shin Bet Chief Yuval Diskin, who next week will end six years at the head of Israel's internal security agency.

Mr Diskin did not mention the prime minister by name but said that "the response to the Palestinian unity deal was out of proportion". Ever since the announcement of the deal, Mr Netanyahu has been attacking it at every opportunity, both in Israel and in visits last week to Britain and France.

Mr Diskin also criticised the government's decision to stop transferring funds to the Palestinian Authority in the wake of the unity agreement, saying "that these are tax monies that belong to the Palestinians anyway and if we withhold them, Israel will have to take responsibility for supplying basic services".