I am writing a fictional novel that rewrites history surrounding the Gulf war. It involves at one point the actions of the english Prime Minister at the time. In the novel he takes us to war with Iraq under false pretences (some would say that was the case anyway) however my explanation as to why he invades Iraq is different from the accepted reasons, and some might consider it to be unjustified. Am I on dodgy ground here? Could I be done for libelling the PM? Can i mention his name, and if not, will changing his name take away from the realism of the novel? Or should I just not mention his name even though everyone will know who I am talking about.
If you just mention that e.g. Tony Blair was prime minister of the UK at the time of your fictional events, then that is similar to stating that there is a city called London. It will be no problem at all.
If you describe Tony Blair doing what all prime ministers do (e.g. be friendly to a journalist) or what is a historical, documented, published and proven fact (and you mention this documentation and give your sources in an appendix), there will be no problem at all. Just make sure you quote the source correctly: if the source says "it might have been", you must describe the events with the same possibility of doubt.
But as soon as you have any real and existing person do anything in any kind of fictional work that either you have made up or that may be interpreted as reflecting negatively on that person, from picking his nose to starting a war, you will most certainly recieve a letter from that person's lawyer.
I would never do it. The newspapers are full of lawsuits for journalists mentioning the names of the children of celebrities, stating that a celebrity dyed their hair (German chancellor Gerhard Schröder sued a newspaper over this) and similar apparent banalities. I can't imagine the backlash you will face when you imply a politician might have lied to the public.
If the person is dead, go ahead, but as long as he is alive, make up an imaginary prime minster, just like American movies always have fake presidents in them.
If your whole idea hangs on working with something that everybody knows to be true but has never been legally proven, talk to a lawyer experienced in the relevant field (journalism, personal rights, rights over one's own image, slander, etc.) and pay for legal advice that you can rely on (and never trust anything written by anonymous persons on the web).
I am writing a fictional novel that rewrites history surrounding the Gulf war ... Could I be done for libelling the PM?
Possibly. The laws about slander and libel vary widely from nation to nation, and a fig leaf of "it's fictional" would probably not be enough in and of itself to survive a challenge.
You're better off making a thinly veiled analog with a different name and significantly different characteristics, especially if your novel's PM is at all villainous in any way. If omitting all personally identifiable details can be done, that may also suffice.
Also, in addition to a possible claim of libel, be aware that you might be hit with trademark or privacy laws as well. Make a novelization about a news story of some living person's heroics, and you may be presented with a bill for using their likeness.
In general, you shouldn't worry too much about legal affairs (aside from copyright) when writing. Once you have a completed work and want to move into publishing is the time you'll want to worry about what changes may be necessary to comply with libel, trademark, or privacy laws.
I agree with what others have said, both here and in the above-referenced question (which I reproduce here: writers.stackexchange.com/q/9215/1993). To wit (always wanted to say that), change the person. In your specific case, start your novel with Tony Blair losing the election. Instead, the PM is Snidely Beckinsworth. You can then make Snidely whatever you want -- egotistic, money-grubbing, cowardly, sadistic, stupid, war-mongering, etc. -- and nobody can complain. Snidely is your stand-in for Tony (with cosmetic details changed), but you are covered because your novel already makes clear that Snidely is not Tony. I suppose Mr. Blair could still try to sue for libel, but then he'd have to prove that, despite the internal evidence of your novel, your unflattering PM is obviously him. (But that's self-defeating. If it's obviously him, then it isn't libel.) The free publicity from such a lawsuit would easily pay for a five-quid barrister. Just don't make Snidely exactly like Tony, except that he's a lying jerk, because that WOULD get you into trouble.