The new head of the British Army has warned that defeat for the international coalition in Afghanistan would have an "intoxicating impact" on extremists around the world.

General Sir David Richards said the failure of the powerful alliance would convince terrorists that "anything might be possible", while inflicting an "enduring grand strategic impact" on Britain's global reputation.

In his first major speech since taking over last month as the Chief of the General Staff, Gen Richards said he was optimistic that the coalition would soon "get the formula right".

In a wide-ranging address to the Chatham House foreign affairs think tank in London, Gen Richards - a former commander of Nato forces in Afghanistan - said it was essential Britain saw the mission through in order to preserve its relationship with the US and honour its responsibilities to the Afghan people.

Failure, he said, could have an "alienating and potentially catalytic effect" on millions of Afghans, while leading to a resurgence of al Qaida-inspired terrorism and the spread of instability to nuclear-armed Pakistan.

"Add to that the hugely intoxicating impact on extremists worldwide of the perceived defeat of the USA and Nato.

"Anything might then be possible in their eyes - and that's what we should expect, despite the skill and courage of our police, intelligence and security services."

The comments came as former head of the SAS Lieutenant-General Sir Graeme Lamb told the Independent that grievances among the Taliban rank and file must be addressed.

He has been tasked with overseeing a new strategy to get those with more moderate views to switch sides, the newspaper reported.