BRITISH academic circles are in turmoil over a rare challenge to the mystique surrounding one of the country's greatest heroes, World War II leader Winston Churchill. A new biography of Churchill rejects the traditional post-war image of the pugnacious cigar-smoking prime minister, arguing that he lost more than he gained in the war against Nazi Germany. English historian Dr John Charmley has created a storm with Churchill: The End of Glory which questions the wisdom and competence of Churchill, for decades an untouchable popular hero. Dr Charmley's book suggests that Churchill, obsessed with defeating Hitler, resisted real opportunities for peace with Germany. He argues that Churchill's insistence on crushing Hitler impoverished Britain in a war that cost it its empire, left it dependent on the United States and handed Eastern Europe to another demagogue - Soviet dictator Josef Stalin. ''Churchill stood for the British Empire, for British independence and for an 'anti-Socialist' vision of Britain,' '' Dr Charmley writes. ''By July 1945 the first of these was on the skids, the second was dependent solely upon America and the third hadjust vanished in a Labour election victory. . .it was indeed the end of glory.'' Dr Charmley argues that the British peace lobby was particularly strong in the early summer of 1940 - including Dunkirk but before the fall of France on June 23 - and that Churchill himself openly contemplated a negotiated settlement with Hitler in cabinet on May 27. The following day the prime minister, who had been in office for less than a month, had to fight hard to persuade his colleagues that war remained a viable option. Yet Hitler had shown time and again in the prelude to the invasion of Poland that his word was worthless, and by invading Prague in March 1939 convinced Churchill that his gut assessment of the Fuhrer's intentions was essentially correct. In Dr Charmley's analysis, the best option open to the cabinet was to undermine Hitler's position by cultivating ''non-ideological Nazis'' such as Goering, just as it later cultivated Marshal Pietro Badoglio in Italy. Goering, who was eventually expelled from the Nazi party in April 1945, had lobbied actively for peace in October 1939 and evidence has recently come to light that he even wrote a valedictory letter to Churchill from Nuremberg. According to Dr Charmley's thesis, the greatest window of opportunity for peace was opened by the invasion of Russia in June 1941, which Hitler called a ''march . . . that, for its extent, compares with the greatest the world has ever seen''. Already in control of Warsaw, Copenhagen, Oslo, The Hague, Brussels, Paris, Belgrade and Athens, ruling from the Arctic to the Mediterranean, he now committed 3,200,000 troops against Stalin's army in Operation Barbarossa. Even Churchill, Dr Charmley argues, questioned how much he achieved with the bitter and long war. By the end of it in 1945 Britain had been weakened forever by huge war debts, the destruction of traditional industries and the loss of empire. Conservative Churchill lost power to the socialist Labour Party the same year. ''It was hard to argue that Britain had won in any sense save that of avoiding defeat,'' Dr Charmley writes. But even then many Britons would brook no criticism of Churchill. Despite his acquiescence in handing Eastern Europe to Stalin, Dr Charmley says Churchill was regarded as above reproach. Britain needed the Churchill myth, he says. ''As Britain's decline as a great power proceeded apace, so did the need for Churchill grow. Whilst he lived, trailing clouds of glory, the fame of the Empire for which he had stood was not quite dimmed.'' Criticising Churchill causes some discomfort in Britain where to many people he embodies what they think of as the gritty determination that kept them going through the war years. Churchill's admirers and detractors alike have reacted vigorously to the Charmley analysis, either damning it as sensational revisionism or a welcome debunking of a legendary leader whose reputation was built on wartime propaganda. Correlli Barnett, keeper of the archives at Britain's Churchill College, believes that Churchill would have been negotiating from a position of weakness, in spite of victory in the Battle of Britain. ''Germany controlled most of Europe from Norway down to the Spanish coast. What sort of peace do you think that Hitler would have found acceptable? It's absurd to suggest that he could have been toppled or that there was a solid lobby in Germany to get rid of him.'' There was no reason to assume that the Final Solution would have been averted by peace in the summer of 1941, only a few months before the Wannsee conference initiated the Final Solution. Churchill's grandson, Conservative politician Winston Churchill defends his famous namesake, saying: ''If some of these supposed historians had lived through the reality of Nazi occupation, they might have a slightly different appreciation.'' But former Conservative defence minister Alan Clark has welcomed the Charmley view as a great post-war work. Building on the Charmley arguments in The Times, Clark, a right-wing maverick, said Churchill could have negotiated peace in 1941, saying a ''more rational leader'' could have got excellent terms. Clark, who is also an historian, says Churchill robbed Britain of superpower status. Dr Charmley was well aware he was playing with fire in reassessing the mythology surrounding Churchill. As a member of the post-war generation - he is 37 - Dr Charmley says he is among the few historians who can view Churchill dispassionately. ''We are the first generation to view him only as an historical figure. I wanted to clean the varnish off the portrait, so to speak, to look in closer detail at the man, warts and all.'' But the book also praises Churchill, with qualifications: ''That he was a great man cannot be doubted, but his flaws too were on the same heroic scale as the rest of the man.'' Dr Charmley, a lecturer at the University of East Anglia and holder of a professorial chair dedicated to Churchill at Fulton, Missouri, accepts there will be criticism of his book. But he is philosophical: ''To those who might be offended by my latest work I can only say: 'Surely the freedom to express one's views is what the last World War was all about.' ''