Mitchell is head of the all party British-Icelandic parliamentary group and has been repeatedly critical of his own government's handling of the crisis when Iceland bank assets in the UK were frozen by prime minister Gordon Brown, using anti-terrorist legilsation. The terrorist label caused deep offence among Icelanders, not least within the country's fishing industry.

Because clearing bank transactions were frozen for a period, the move threatened to disrupt fish supplies between Iceland and the Humber until intervention by Mitchell and the Grimsby Fish Merchants Association, which unblocked payments and fish shipmets flowed again. Ironically, Mitchell's own council in Grimsby risks losing £7 million which they invested in failed Icelandic banks.

The petition was presented at Westminster by the 'Icelanders Are Not Terrorists' organisation which included a woman wearing a 'skautbuningur', traditional Icelandic fishing costume,

The outspoken Labour MP earlier accused the Government of 'big power bullying '. 'Perhaps HMG wanted to look tough. But it could be a plot to force Iceland into full membership of the EU despite the Common Fisheries policy which gives equal access to a common resource so that imposing it on Iceland would ruin their basic industry. As it has ours.'

He added: 'We need the fish to keep the market and the factories going. Iceland needs the revenue to help it out of its troubles.'

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