Tony Blair has again rejected calls for a fresh inquiry into the 7/7 attacks, saying it would undermine the security services.
The prime minister repeatedly dismissed Tory leader David Cameron's demands for a "proper independent inquiry".
He also told MPs at Commons question time that it would divert resources from the fight against terrorism.
Survivors of the 2005 attack renewed their calls for an inquiry on Monday after the fertiliser bomb plot trial.
It emerged at the end of the year-long court case that MI5 had watched and followed two of the 7 July bombers, Mohammad Sidique Khan and Shehzad Tanweer, a year before the attacks as part of their surveillance of the fertiliser bomb plotters.
Calls for a fresh inquiry into the 7/7 attacks grew after it emerged that MPs and peers on the Intelligence and Security Committee (ISC) were not shown photographs linking Khan to known militants.
Security sources say MI5 said it did not reveal the images to the parliamentary committee because they were taken by police officers not MI5 operatives.
Mr Blair has asked the ISC to consider why the 7 July bombers were not picked up.
BBC home affairs correspondent Daniel Sandford said survivors and relatives of the dead had pinned their hopes for news of a public inquiry on the end of the fertiliser trial.
This was the moment the links with the 7 July bombers could be revealed.
Their hopes had been dashed by Mr Blair, our correspondent added.
He said that, if Mr Blair's successor did not take a different view, they would take the government to court in an attempt to find out how 52 people could be killed by two men who had been observed meeting with terrorists on several occasions.
In the Commons, Mr Cameron dismissed the ISC inquiry, saying a full independent inquiry was needed because the committee had limited powers of investigation.
He said people wanted such an inquiry because of "the scale" of what happened in London on July 7 when 52 people were killed.
"The reason people want a full inquiry is to get to the truth," said Mr Cameron.
But Mr Blair said that although the ISC's first inquiry received the "vast bulk" of the information and went into "immense detail", it had to be "cryptic" because the fertiliser bomb trial had not been concluded.
The prime minister said the new ISC inquiry was "perfectly entitled to call for anything else" it needed.
He told MPs: "I don't think it would be responsible for us...to have a full, independent, further inquiry, which would simply have the security service and the police and others diverted from the task of fighting terrorism."
The committee is expected to examine claims that West Yorkshire Police special branch was not told about the MI5 surveillance operation.
However, ISC chairman Paul Murphy MP had previously indicated that police were informed.
Some of those affected by the 2005 attacks delivered a letter to the Home Office on Tuesday requesting an "impartial public inquiry".
They said the government's latest comments reinforced their belief that the ISC was not the appropriate body to conduct an inquiry.
Jacqui Putnam, who survived the Edgware Road bomb, said: "I am left wondering what else MI5 failed to tell the ISC...the committee cannot possibly carry out an effective, independent or impartial 're-inquiry' - it now has a position to defend."
Janine Mitchell, whose husband Paul was seriously injured in the attacks, added: "We have already had an ISC inquiry and it produced a report containing inaccurate and misleading information, based on evidence which was incomplete and as a consequence both the inquiry and its report were fundamentally flawed."
By June 2004 MI5 had part of Khan's name on file twice, a family address and various pictures of him.
The ISC committee investigating 7/7 only ever saw one MI5 photograph of Khan. It did not see other photographs obtained by the BBC. A senior Whitehall source has told the BBC that the committee were aware other pictures existed and could have seen them if they had been requested.
On Monday, five men were given life sentences for a foiled plot to build a huge fertiliser bomb for a UK attack.