BBC's Tim Hirsch: "It wasn't the best backdrop to such a huge and serious emerging crisis"

Dr William Watson made the claims to the official BSE inquiry, set up to investigate the disease.

Correspondents say further evidence is also emerging of an apparent attempt to cover up the crisis to protect beef exports and avoid public outrage.

As head of the government's Central Veterinary Laboratory between 1986 and 1990, Dr Watson was in charge of investigating the disease at a time when many of the people who became infected with the human form of the illness would have acquired it.

Lord Justice Nicholas Phillips is heading the inquiry

He told the inquiry it was a time when the government was running down its own research facilities in the Ministry of Agriculture.

This made for low morale among the workforce, he said, and also meant it was difficult to recruit top quality scientists.

In the wake of the BSE tragedy, the controversial laboratory in Weybridge, Surrey, was attacked by other experts for not carrying out enough research into the disease.

Significant claim

Although his oral evidence does not reveal any startling new information, the fact that the director of the laboratory makes the claim is seen as highly significant.

Written evidence submitted to the inquiry to coincide with the appearance of Dr Watson's one-time colleague, Dr Ray Bradley, also hints at a cover-up.

Minutes of a 1987 meeting at the Ministry of Agriculture at which Mr Bradley, then head of the pathology department at the CVL was present, add weight to claims of subterfuge.

Confidential document

In the meeting Mr Bradley said that if the disease under investigation - BSE - turned out to be bovine scrapie - that is a bovine version of a disease known to occur in sheep - "it would have severe repercussions for the [beef] export trade and possibly also for humans".

"It is for these reasons I have classified the document confidential," he said.

According to the BBC's Environment Correspondent Tim Hirsch it is just one example of evidence pointing to a cover up.