The British Army was told four years ago in an official report that soldiers exposed to dust from depleted-uranium ammunition risked developing lung, lymph and brain cancer.

The secret report, prepared by the Army's medical team and seen by The Independent, warned that soldiers cleaning and cannibalising vehicles hit by rounds tipped with depleted uranium (DU) were exposed to eight times the UK's accepted safety levels for the dust.

Today, the Ministry of Defence dismissed the report as a "discredited" draft paper which had been prepared by a trainee and not endorsed by senior staff.

In a statement, the MoD said: "Although much of the summary is correct, certain elements are scientifically incorrect or misleading.

"We are clear about the potential hazards of DU and believe that although it was possible that small quantities of DU dust may have been inhaled or ingested by those taking part in the Gulf conflict, we believe the health risks, both radiological and toxic, to have been small."

But news of the existence of the document, The Use And Hazards of Depleted Uranium Munitions, will be embarrassing for the Government.

The Armed Forces minister, John Spellar, was forced to make a U-turn in policy this week by offering medical screening for personnel who served in the Balkans. But the Government did not accept any link between the use of DU ammunition and illnesses suffered by the personnel, he said. The programme was intended to provide "reassurance".

The Ministry of Defence has also consistently claimed that British soldiers in the Gulf, Bosnia and Kosovo were not exposed to danger by dust from DU munitions.

And opposition MPs are calling for a new Commons statement from the Government.

Nato's secretary general, Lord Robertson of Port Ellen, a former defence secretary, said yesterday that there was no scientific evidence linking DU shells to illness among service personnel. "I want to reassure our troops, civilian back-up and families that there is nothing to fear from this particular type of munitions," he said. "People must understand that when we act, we act with the interests of our troops and civilians very much in mind."

Lord Robertson revealed, however, that Nato and Yugoslavia will exchange information on sites where DU ammunition landed.

The leaked Army medical report, compiled in March 1997 in the dying days of the last Tory government, considers the risk of DU exposure in the Gulf War and states: "Inhalation and ingestion of uranium compounds may have occurred in personnel involved in the recovery or examination of destroyed tanks". It recommends that "all personnel should have a full medical history taken and be counselled appropriately. They should be aware that uranium dust inhalation carries a long-term risk to health."

The Army medical team says in the report that "inhalation of insoluble uranium dioxide dust will lead to accumulation in the lungs with very slow clearance - if any. Although chemical toxicity is low, there may be be localised radiation damage on the lung leading to cancer. Uranium compound dust is therefore hazardous.

"The risk of occupational exposure of inhalation must be reduced. This can be achieved through careful husbandry and the use of respiratory filters or positive pressure systems when working in battle-damaged vehicles."

But soldiers did not wear protective clothing while working with Iraqi tanks damaged by DU rounds, the MoD confirmed last night. "A signal was sent, but we have publicly acknowledged that it did not reach the appropriate people,"a spokesman said.

Veterans campaigning over the issue of Gulf War illness were angered by the report. "This shows Mr Spellar misled the Commons in what he said on Tuesday," said Shaun Rusling of the National Gulf Veterans and Families Association. "Did he have access to this document when he made his statement? If not, the civil servants have a lot of explaining to do.

"We have heard rumours about the existence of the report but never been able to get the details of what it says. This is an important legal document in any action we may bring."

Meanwhile, the European Commission committee which advises member states on nuclear safety issues and radiation risks began a special assignment yesterday to investigate health claims associated with the use of DU.

And Malcolm Hooper, a professor at Sunderland University, warned that thousands of Britons living close to DU firing ranges or factories producing the ammunition were at risk from contamination. People living near centres manufacturing the arms faced a "very real" danger, he said. "Often these are covert and are not known to the local population."

The MoD denied the claims.