The government took the unprecedented decision yesterday to block the release of cabinet minutes about the invasion of Iraq on the grounds that it would undermine democratic decision-making, the very argument used by freedom of information bodies which had ordered their disclosure.

Jack Straw, the justice secretary, told MPs the government had decided to use its veto powers under the Freedom of Information Act because publication "risked serious damage to cabinet government".

He argued that the potential damage "far outweighs" any potential public benefit of publication and added that the decision to go to war had already been examined "with a fine-toothed comb" in several inquiries.

Straw denied he was trying to "circumvent" the FOI Act and said he had finally come to the decision on Monday afternoon, after the "final cabinet discussion of the matter". There had already been at least four inquiries into the war and the prime minister would consider the case for a further inquiry once the troops were home, he said. "Confidentiality serves to promote thorough decision-making. Disclosure of the cabinet minutes in this case jeopardises that space for thought and debate at precisely the point where it has its greatest utility."

The decision was greeted in the chamber by calls of "shame" and "disgraceful" from Labour and Conservative MPs. But Dominic Grieve, shadow justice minister, backed the government, clearly reflecting concern on the Conservative frontbench at the prospect of their potential cabinet discussions seeing the light of day. However, Grieve said the case went to the heart of what he called the disquiet over how the decision was taken. He referred to "sofa government", the criticism made by the Butler inquiry into the use of intelligence on Iraq, and one of the key reasons why Richard Thomas, the information commissioner, and later the Information Tribunal, said the minutes should be published.

There was now an overwhelming case for an inquiry into the Iraq war, along the lines of the privy council inquiry that was held into the Falklands war, said Grieve. He continued: "Do you appreciate how it will appear to the public for someone so closely involved in the key decisions now to be personally blocking the release of that information?"

Grieve said the government released information "when it suited them" - such as Conservative cabinet documents from the exchange rate mechanism crisis in the 1990s - for "reasons of the most blatant political advantage".

Thomas, the tribunal observed last month, had stressed "the fact that the decision to go to war was controversial at the time, and remains so, because it was not one that was based on self-defence or a united international response to aggression. It had been opposed by a mass public demonstration ... and is now perceived as having been based on incorrect intelligence." Criticism had been made, the tribunal added, that it was not until "the last minute" that the full cabinet was able to see the then attorney general's revised opinion that invasion without a fresh UN resolution was legal.

There had been criticism that his previous legal opinion of 7 March, which contained serious caveats, was not disclosed to the cabinet. Concern remained that the stated reasons for invading were "not genuine".

The Information Tribunal had ordered the disclosure of minutes of two key cabinet meetings, on 13 and 17 March 2003, when the legality of the invasion was discussed. It described the case as exceptional. It brought together issues "that were so important that, in combination, they created very powerful public interest reasons why disclosure was in the public interest", it said.

By a majority of two to one, it rejected arguments by the country's most senior officials that disclosure would prevent ministers from having frank discussions and would undermine the principle of collective cabinet responsibility.

Thomas said last night that his decision to order disclosure of the cabinet minutes was made under the Freedom of Information Act on public interest grounds.

"Using the power available to me under ... the Freedom of Information Act, I will shortly lay a report before parliament to record the circumstances leading to this outcome," he said. The Campaign for Nuclear Disarmament condemned the decision, claiming it was another attempt to suppress public debate on the "biggest political scandal" in decades.

The Conservative MP Edward Leigh also condemned the move: "Surely the people have the right to know the legal basis of a war in which up to 600,000 people died? This whole thing stinks."

Labour's Andrew Mackinlay noted Straw did not seem to have any heavyweight political backing in the house to support his decision. "Have you looked behind you to see there are only two office holders - a parliamentary private secretary and the church commissioner - who support you? There is not a single member of your honourable friends here endorsing you. Could it be they are ashamed and embarrassed by this announcement?

"I bear the scars of having trusted the prime minister on this matter."