Australian Prime Minister John Howard has called a public inquiry into how the country's intelligence services misread Iraq's weapons capabilities heading into last year's war.

Howard was acting on the advice of a parliamentary inquiry that cleared his government of wrongdoing Monday.

Like the governments of Britain and the United States, Howard's team had been accused of exaggerating the threat posed by Saddam Hussein and his alleged weapons of mass destruction.

The parliamentary inquiry found that Australia's presentation of the case for war was "more moderate" than that of its two allies.

"The committee found there was no interference in the work of the intelligence agencies," Howard said in the legislature. "It completely denied the 12-month claim of the Labour Party that we went to war based on a lie."

But Labour politician Kevin Rudd said the report does not exonerate the governing Liberals.

"This report is a catalogue of intelligence failure," he said. "It is a catalogue of a government cherry-picking the intelligence advice it received to suit its own political objective."

The country sent about 2,000 troops to Iraq to join the American-led coalition, despite the opposition of many Australians. About 850 are still in the Persian Gulf country.

Among other things, the new public inquiry will look at whether Australian intelligence officers are too reliant on information from the U.S. and Britain.

It will be headed by a former intelligence expert and should report back to parliament in about three months.