British Prime Minister David Cameron was aware that special commandos and Mi6 officers were to mount a secret mission in Libya, Foreign Secretary William Hague has said.
Hague said Cameron knew about last week's operation, which ended in an embarrassing failure when British personnel were held captive by Libyan opposition groups.
As the secret mission was condemned in the Commons as "ill-conceived, poorly planned and embarrassingly executed", a Whitehall blame-game broke out over the operation, the Telegraph reported.
Guarded by Special Forces troops, British intelligence officers last week arrived near Benghazi by helicopter as a "pathfinder" exercise to prepare the ground for a larger diplomatic delegation.
The secret mission failed when local Libyan forces put the British personnel in "temporary detention". Drawing laughter from MPs, Hague said that was caused by a "serious misunderstanding" about their mission.
The prime minister has faced persistent criticism over his handling of the Libyan crisis, and Labour said the botched "diplomatic mission" has raised fresh questions about the Government's competence, the report said.
On Monday morning, Downing Street said that Hague was responsible for the mission in the Benghazi area. Its version of events caused anger in the Foreign and Commonwealth office, where diplomats saw it as an attempt to shift blame.
Hague later told MPs that Cameron and other ministers were privy to the secret operation. "The Prime Minister and other colleagues were aware that we would attempt to put a diplomatic team into eastern Libya," Hague said.
The foreign secretary said he took final responsibility for the mission but insisted that the "timing and details" were down to military commanders and Whitehall officials.
Some critics have questioned the decision for the officials to travel by helicopter in the early hours of Friday morning, instead of making the short journey from central Benghazi in the open.
"The timing and details of that are operational matters decided by the professionals, but ministers must have confidence in their judgments as I do and must take full ministerial responsibility for their judgments and decisions, as I do," Hague was quoted as saying by the Telegraph.
Sir Menzies Campbell, the former Liberal Democrat leader, told Hague the failed mission had damaged Britain's international standing.
"I regret what I am about to say. Isn't it clear that this mission was ill-conceived, poorly planned and embarrassingly executed. What is he going to do to restore the reputation of the United Kingdom in relation to foreign policy in the Middle East," he asked.
Douglas Alexander, the Labour shadow foreign secretary, said the failure of the mission was "just the latest setback for the United Kingdom and raises further serious questions about ministers' grip and response to the unfolding events in Libya."
Hague said it was right to try to make contact with the Libyan opposition, saying he intended to "send further diplomats to eastern Libya in due course". However, he said those officials will be deployed "on a different basis".
He also rejected calls for Britain to arm the Libyan opposition, pointing to the United Nations arms embargo. Cameron last week told MPs he was willing to consider military aid to the rebels, the daily reported.
Hague paid tribute to the British special forces team which was apprehended in Libya owing to what he called a "serious misunderstanding of their role".
In his statement to the House of Commons, Hague, who authorised an operation to make contact with the Libyan opposition, was to forced to explain the botched special forces mission to Libya in which eight people reportedly carrying weapons and fake passports, were detained by rebels.
The incident prompted a humbling apology from the UK ambassador broadcast on Libyan television.
"Last week I authorised the dispatch of a small British diplomatic team to Eastern Libya, in uncertain circumstances which we judged required their protection, to build on these initial contacts and to assess the scope for closer diplomatic dialogue. I pay tribute to that team," said Hague.
"They were withdrawn yesterday after a serious misunderstanding about their role leading to their temporary detention. This situation was resolved and they were able to meet Council President Abdul-Jalil.
"Howeverm it was clearly better for this team to be withdrawn. We intend to send further diplomats to Eastern Libya in due course," the foreign secretary said.
The Foreign Office has confirmed that it had evacuated more than 600 British nationals from Libya and was aware of around 180 British nationals still in Libya.
Hague said the Gaddafi regime was launching military counter-attacks against opposition forces.
"There has been intense fighting in the East and centre of the country along the coastal strip between the opposition-held Ras Lanuf and the Gaddafi stronghold of Sirte. Our position is that Colonel Gaddafi must put an immediate stop to the use of armed force against civilians and hand over power without delay, to a government which recognises the aspirations of the Libyan people and is more representative and accountable," he said.
He said Prime Minister David Cameron will attend an emergency meeting of the European Council on March 11.
The G8 Foreign Ministers meeting would take place in Paris next week, Hague said, adding it will be a further opportunity to widen the international coalition addressing the crisis in Libya; to underline with the United States, Russia and others the urgency of progress on the Middle East Peace Process and on Iran's nuclear programme.