BODY: MR PETER LILLEY, trade and industry secretary, yesterday denied claims that Britain had exported large quantities of uranium suitable for making nuclear weapons as Labour accused the government of stifling debate and of hiding 'skeletons in its cupboard'.

Less than 100kg of depleted uranium had been included in an 8.6 tonne consignment identified in customs statistics disclosed at the weekend, Mr Lilley said on BBC radio. The rest comprised medical or industrial isotopes, lead protection and dry ice.

His attempt to defuse the latest political furore over exports to Iraq before its invasion of Kuwait a year ago came as Mr Roy Hat tersley, deputy Labour leader, launched a campaign against what he described as 'the arrogance and complacency' of the government.

The government 'believes that it has the right to rule without question or criticism, and there are skeletons in its cupboard which it is determined to keep locked away,' he said in a speech in Newbury in Berkshire.

The prime minister had responded to legitimate questions about the Bank of Credit and Commerce International or about exports to Iraq by accusing Labour of 'muck raking', Mr Hattersley said.

Mr Chris Patten, Tory party chairman, responded: 'Without principles and without policies, Labour are going to go in for a lot more of this sort of thing.'

The Department of Trade and Industry is expected later this week to pass to the Commons' trade and industry select committee further details of British exports to Iraq.

In his interview, Mr Lilley said the depleted uranium, as distinct from natural uranium, sent to Iraq had had most of the valuable material removed.

It quoted a former chief in Iraq's nuclear industry as saying the material was used in President Saddam Hussein's program to build a nuclear bomb.

The evidence, gleaned from customs documents, casts doubt on British government assurances that uranium exports to Iraq were minimal.

Depleted uranium, after processing in complex and expensive reactors, will produce small quantities of plutonium, needed for bomb production.

The Sunday Times said three consignments, totalling 8.6 tonnes of depleted uranium and other radioactive materials, were exported on licences from the British Department of Trade and Industry between 1988 and 1990.

It quoted a department official as saying eight tonnes of depleted uranium was "a tiny amount." British Nuclear Fuels was said to have a stockpile of 40,000 tonnes of depleted uranium.

In a separate development yesterday, Iraq said it underestimated its stocks of chemical weapons in April because it was in a hurry to prepare a list for the United Nations.

In the list offered in April Iraq declared between 11,000 and 12,000 chemical munitions, about a quarter of the actual total as estimated by United Nations inspectors.

An Iraqi foreign ministry source, quoted by the official Iraqi News Agency yesterday said the first list was "hurriedly prepared" and included only the most important items.

In Istanbul, meanwhile, Kuwait and its Persian Gulf allies blocked an attempt by Iraq to raise the issue of U.N. economic sanctions, delegates to a meeting of Islamic foreign ministers said.

Instead, ministers from the 45-nation Organization of the Islamic Conference will discuss "consequences of the Iraqi aggression against Kuwait."

"The position of the gulf states was crucial. They sided completely with Kuwait against Iraq," said one delegate to the meeting, which seeks to heal divisions caused by the Persian Gulf war

Iraq sought to include sanctions as a humanitarian issue when senior officials met privately to draft an agenda. The move was a bid by Iraq to end its economic and political isolation.

"The Iraqi representative spoke of the suffering of the Iraqi people because of the embargo as an issue of top urgency," one delegate said.

Iraq received backing from some member states including Libya, Algeria and the Palestine Liberation Organization - all of which sympathized with Baghdad throughout the gulf crisis.

Delegates said Kuwait's envoy countered with an onslaught against Iraq, recalling memories of the invasion a year ago Friday and abuses by Iraqi troops during the occupation.