Britain and the US were considering measures to bring about "regime change" in Iraq two years before military action was taken to remove Saddam Hussein, the head of MI6 has said.

Sir John Sawers, who acted as Tony Blair's private secretary for foreign affairs in the run-up to the Iraq invasion in March 2003, said that discussions about "political" measures that could be taken against Saddam were taking place as early as 2001. He also said that the US ignored warnings over the removal of tens of thousands of members of Saddam's Baath party from their administrative posts.

Sir John told the Iraq inquiry that there was no talk of military action in 2001, but that the country was one of several in which the British Government would have liked to have seen regime change. He said that the preferred tactics were similar to those used to oust the former Serbian leader, Slobodan Milosevic.

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Officials in Whitehall considered plans including the bolstering of a number of opposition groups within Iraq. There was even talk of having Saddam indicted as a war criminal as a result of his invasion of Kuwait in 1990. "I think there are a lot of countries around the world where we would like to see a change of regime. That doesn't mean one pursues active policies in that direction," Sir John told the inquiry.

Discussions took place as early as January 2001 with Dick Cheney, the former US Vice President, and National Security Adviser, Condoleeza Rice, as President Bush prepared to enter the White House. "We talked about whether there was a way Saddam Hussein could be indicted for war crimes, whether there was a vision that could be created for the Iraqi people of what life would be like after Saddam Hussein," he said. "There was no discussion of military invasion or anything like that."

He added that during his time as a senior diplomat in Baghdad, he had urged US post-war planners to limit the scale of the de-Baathification programme, a policy which many believe left Iraq unable to function and contributed to an insurgency. Moves to remove 30,000 Baathist members from their jobs and the disbanding of the Iraqi army were decided by the US without meaningful consultations with Britain, Sir John said.

While Britain had supported plans to cut out the three most senior levels of the Baathist regime built up under Saddam, it did not support the removal of even lower officials, which included teachers. The US administration's insistence meant that an extra 25,000 Iraqis lost their jobs. "In retrospect it seemed that the decisions were taken in advance in Washington," he said.

However, Sir John disputed that the extent of the removals and the loss of the Iraqi army was to blame for the major breakdown in law and order that took place in Iraq after the invasion and the rise of an insurgency. "The reconstruction of the Iraq Government would have been impossible without it," he said. "The public mood was virulently and vitriolically anti-Saddam."