Britain's Tony Blair rejected the resignation of a key ally whose ministry allowed over 1,000 foreign prisoners to walk free without proper checks, the latest in a series of setbacks for the prime minister.

Home Secretary (Interior Minister) Charles Clarke said on Wednesday he offered to quit after learning of the blunder, which put convicted murderers and rapists back on Britain's streets after they had served their sentences.

"I told him (Blair) I was prepared to resign if he thought it was right, and he said he didn't think it was right," Clarke told BBC Radio.

The debacle comes just days before Blair's Labour party contests local elections — the prime minister's first test at the ballot box since he won a third term in office last May. It is the latest in a string of embarrassing revelations for Blair's party which, according to one poll published this week, is less popular now than at any point over the past 19 years.

The premier has been criticized over party funding and the state of the national health service, and woke up on Wednesday to news of another sex scandal — this time involving his Deputy Prime Minister John Prescott and a secretary. Blair's government has made much of its pledge to cut crime and expel foreigners it regards as a security threat, so the revelation it let 1,023 convicted criminals walk free without proper checks is a severe blow.

It is expected to play into the hands of the opposition Conservative Party and the fringe far-right British National Party (BNP) in the May 4 ballot. The BNP is campaigning on an overtly anti-immigration ticket. The convicted criminals, who included murderers, rapists and pedophiles, were released over the past seven years.