Birmingham's Conservative-led council was at war with former Tory leader Iain Duncan Smith after he warned large parts of the city felt disenfranchised from its success.

Mr Duncan Smith, who led the Conservatives from 2001 to 2003, was in Birmingham yesterday to release a report highlighting the problems of poverty and its unemployment level, one of the worst in the country. He argued that Birmingham had transformed its city centre and attracted significant investment, but that too many people were not sharing in the city's success.

But the Tory-led council claimed his findings were "poorly researched and in some cases wholly inaccurate", and issued a 2,000-word dossier describing key elements of the report as "inaccurate, out of date or misleading".

The report, called Breakthrough Birmingham, followed a high-profile inquiry by Mr Duncan Smith into social breakdown across Britain, which published its findings in July.

This was commissioned by Conservative leader David Cameron, although it was published by Mr Duncan Smith and his think-tank, the Centre for Social Justice, rather than the Conservative Party.

Mr Duncan Smith has extended his inquiry to look at the specific problems facing Britain's major cities. His inquiry into Birmingham warned: "Despite the city's business success, Birmingham has the highest rate of unemployment out of all our core cities."

The report included a short section contributed by the city council, which seemed to endorse his findings. The council's contribution said: "Worklessness is a national problem and Birmingham, as the largest local authority in the country, has particular challenges when dealing with this issue."

The report also praised the city council, highlighting its housing policy and support for voluntary organisations.

However, the council yesterday released a statement attacking the report. It said: "We welcome constructive discussion about how we can further build upon the good work we are already doing to improve services and accept that in Birmingham we have particular challenges when it comes to dealing with major national issues such as worklessness.

"However we feel the report clearly fails to do justice to the many improvements the city council has made to its services year-on-year. The report also overlooks our established culture for continuous improvement moving forward.

"We are concerned that some aspects of this report are poorly researched and in some cases wholly inaccurate. That is why we feel it important to set the record straight about the improvements Birmingham City Council has been striving to make in recent years."

The statement was issued in the name of Stephen Hughes, the authority's chief executive, but would have required approval from Mike Whitby, the council's Conservative leader.

Mr Duncan Smith stressed the report was not an attack on the city council or Birmingham in general. He said: "This is not a whack at Birmingham. What we are trying to say is, unless we are honest with ourselves about the problems and where they lie, and the persistent nature of those problems, then we can't start to cure them.

"I was pleased that the council reacted positively, by saying yes, we want to work with you to try to find ways to solve them."

The council's dossier challenges a number of the statistics used in the report.

For example, the authority rejects the claim that 11.4 per cent of children aged 16 to 18 are not in education, employment or training, although this was the figure provided to Parliament by Schools Minister Jim Knight in November.

It adds: "Birmingham also has a great future as a global city with a local heart."

Andrew Mitchell (Con Sutton Coldfield), Birmingham's only Conservative MP, welcomed the report. He said: "Birmingham has made great strides in recent years in regenerating its city centre and attracting inward investment.

"But this report is a reminder that amid the city's growing wealth remain pockets of severe poverty and that unemployment, in particular, blights the lives of too many of its residents."