LONDON, April 17 (Reuters) - Britain is launching a new unit to fight al Qaeda propaganda, Prime Minister Tony Blair announced on Tuesday.

Blair, expected to stand down in the next few weeks amid public anger over his backing for the Iraq war, said it was time for all government departments to unite to win the war of ideas.

"If you want to take the fight to the terrorists you've got to defeat their propaganda and their ideas as well as their methods," Blair told a monthly news conference.

The inter-departmental group will bring together research, information and communications units to generate material to rebut extremist ideology aimed at the media.

Western security analysts have pointed out that al Qaeda and its offshoots have been very adept at using new media, publishing footage of violent executions and attacks on British forces in Iraq on the Internet within hours of them happening.

Al Qaeda has its own media arm, as-Sahab, whose output has included a series of statements by its senior leaders.

Late last year a document issued by a group linked to al Qaeda spelled out the need for its fighters to "carry out a media war parallel to the military war ... because we can observe the effect that the media have on nations."

Intelligence officials say Islamist groups have skilfully exploited the Internet both to spread their propaganda and to circulate know-how on topics such as bomb-making and poisons.

Asked why the job could not be left to the Foreign Office, Blair responded: "You've got to accept that today you can't do this simply by looking at these things in different compartments -- foreign affairs here, home affairs there. It doesn't work like that." He said greater cohesion was needed across government to match up strands of the same fight -- for example talking to local British communities about how to steer people away from radicalism, as well as funding schools in countries like Pakistan to compete with radical religious seminaries.

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