Canadian prime minister Jean Chretien has protested to British Prime Minister Tony Blair over the knighting of the telecommunications tycoon for services to industry and to Wales.

Monsieur Chretien said the Canadian government should have been informed of the honour bestowed on Matthews.

What I and the government object to is that, by conferring the knighthoods without seeking the agreement of the Canadian government, you have not taken into account the Canadian government policy with regard to how Canadian citizens should be honoured Jean Chretien

The owner of the Celtic Manor leisure resort near Newport now has Canadian citizenship and nurtured his telecoms company Newbridge Networks before selling to Alcatel last year.

Canada does not allow its citizens titled honours from foreign governments.

Another Canadian, George Bain, the Vice-Chancellor of Queen's University, Belfast, was also knighted in the honours on Saturday.

M. Chretien phoned Tony Blair, last Friday, to personally express in "very forceful" terms his disapproval when he learned of Mr Bain's honour.

According to M. Chretien's office, the British Prime Minister explained that he did not know Mr Bain was a Canadian-British citizen and, in any event, said it was too late to change the list.

But when the honours list was released Saturday, M. Chretien was furious when he discovered that a second Canadian - Mr Matthews - had been granted a knighthood.

Jean Chretien and Tony Blair in Ottawa earlier this year

He immediately wrote a letter of complaint to Mr Blair and the Canadian government also issued a diplomatic note to the British government expressing its "displeasure with the lack of consultation."

"I am in no way calling into question the accomplishments of Mr Bain or Mr Matthews," he explained.

"In fact I believe that they are distinguished Canadians.

"What I and the government object to is that, by conferring the knighthoods without seeking the agreement of the Canadian government, you have not taken into account the Canadian government policy with regard to how Canadian citizens should be honoured."

The diplomatic row is bound to cause embarrassment to both countries, which normally enjoy a cordial relationship.

Last year Mr Blair carried out a highly successful trip to Canada.

However, the Canadian Prime Minister has previously blocked a peerage awarded to newspaper tycoon Conrad Black.

Conrad Black now intends to renounce his Canadian citizenship after losing a two-year legal battle that ended only last month after Black lost the right to sue M. Chretien himself over the matter.