Britain needs to play a greater role in the fight in Iraq against Islamic State, according to a scathing report published on Thursday by the cross-party Commons defence committee, which describes the UK contribution so far as “strikingly modest”.

Against a background of widespread public horror over Isis’s brutal murder of the Jordanian pilot Muadh al-Kasasbeh, MPs express dismay over Britain’s limited involvement and contrasts this position unfavourably with allies such as the US, Germany, Italy, Spain and Australia.

Rory Stewart, the committee’s chairman, an independent-minded Conservative, said Britain was doing too little. “We must clearly acknowledge the previous failures in Iraq and reform our approach. But that does not mean lurching to doing nothing,” he said.

In what is an unusually trenchant report by the defence committee, the MPs also accuse UK officials, ministers and officers of having “failed to set out a clear military strategy for Iraq or a clear definition of the UK’s role in the operations”.

Given that Isis is regarded by the MPs as the most dramatic and significant threat to regional stability and international security to have emerged from the Middle East in decades, they say: “We are surprised and deeply concerned that the UK is not doing more.”

The MPs highlighted the direct risk posed from Britons returning to the UK from Iraq and Syria. An estimated 600 British nationals have gone to Syria and Iraq; of these about 30 to 40 have been killed, half are still there and the remainder have returned.

The MPs are not proposing that Britain deploys large numbers of combat troops to Iraq, as there appears little public appetite for that. But they are urging the government to adopt a much more robust approach with provision of special forces and drones as well as help with training, help at senior officer level, and money and equipment to bolster the Iraqi army.

Opposition to military intervention overseas has grown in Britain since the controversial invasion of Iraq in 2003, culminating in a surprise Commons backbench revolt that led to a vote against involvement in the Syrian conflict in 2013.

However, the public and political resolve to avoid Middle Eastern entanglements is being tested by graphic film footage of beheadings of journalists and aid workers by Isis, and of atrocities against Iraqis and Syrians.

Senior British commanders remain reluctant to become involved in a military escalation without clear objectives, a significant problem during their time in Iraq and Afghanistan.

The strong tone of the report may reflect the affinity felt for Iraq by Stewart, who helped administer the south of the country after the invasion.

“The nightmare of a jihadist state establishing across Syria and Iraq has finally been realised,” the report says. “Daesh [an alternative name for Isis] controls territory equivalent to the size of the UK, has contributed to the displacement of millions, destabilising and threatening neighbouring states and providing safe haven to an estimated 20,000 foreign fighters, many dedicated to an international terrorist campaign,” Stewart said, adding that, in spite of all that, the UK role was modest.

Rory Stewart, chairman of the cross-party Commons defence committee, said the UK needs to ‘reform its approach’. Photograph: Martin Godwin

He added: “The committee was shocked by the inability or unwillingness of any of the service chiefs to provide a clear and articulate statement of the UK’s objectives or strategic plan in Iraq. There was a lack of clarity over who owns a policy – and indeed whether such a policy exists.”

The UK has so far conducted only 6% of the air strikes against Isis. The committee, which visited Iraq in December, found at that time there were only three UK military personnel outside the Kurdish regions of Iraq compared with 400 Australians, 280 Italians and 300 Spanish.

Britain has provided 40 heavy machine-guns to the Kurdish regional government whereas Germany has provided a long list of armaments that includes 16,000 assault rifles with 6m rounds of ammunition, 30 Milan anti-tank guided missile launchers with 500 anti-tank rounds, and 200 Panzerfaust 3 light anti-tank weapons with 2,500 rounds.

The defence secretary, Michael Fallon, recently announced that the UK was considering sending a further 100 to 200 troops to Iraq, mainly trainers, with some combat troops to protect them.

The committee makes about a dozen specific proposals, ranging from meeting a request from the Iraqi government to send trainers for dealing with improvised explosive devices to providing military staff for help with planning.

The UK has special forces operating from Iraqi Kurdistan at present but the committee would like to see them used in a broader role similar to the counter-terrorism strategy used by the US in Afghanistan.

“We assume that some of this is already in operation. Such a strategy would, presumably, rely on special forces operations and remotely piloted air systems (RPAS) to kill or capture high-value targets and would aim to disrupt their capacity to organise and plan terrorist strikes,” the committee said. “The advantages of such an approach is that it would degrade Daesh leadership without excessive commitment of foreign troops or resources.”

The increased use of drones would bring protests from groups that question their legality as weapons.

Cori Crider, a director at the legal charity Reprieve, warned against the use of drones for killing. “The UK must think twice before it mires itself in yet another American misadventure in the Middle East, especially as US officials show every sign of repeating all the blunders of the recent ‘war on terror’.”

Chris Cole, of the campaign group Drone Wars UK, said: “As there is no political will to send troops to Iraq, and especially since the barbaric murder of the captured Jordanian pilot Muadh al-Kasasbeh, the temptation to use drones to carry out more and more airstrikes will grow.

“But without detailed intelligence from the ground it is simply not possible to know exactly what or who is being hit, and we are already beginning to see regular reports of civilian casualties from coalition air strikes.”

The group obtained, under a Freedom of Information request, details of British drones used in Iraq and of those flying over Syria – from October, when they were introduced, through to December. Over that period the UK flew 100 armed Reaper missions, launching 38 Hellfire missiles.