Mr Butler rejected allegations that American agents were allowed to listen in to secret communications between Iraqi security bodies responsible for protecting President Saddam Hussein.

Speaking at the UN headquarters in New York, he said Unscom, the UN weapons inspection team, discovered in 1995 that it had been "flagrantly deceived by Iraq through false declarations" and had to call upon assistance from UN members which included the US.

Secret communications

BBC Correspondent Jim Fish: Evidence would support Iraqi claims of spying

But he said that assistance had been used only for purposes covered by their mandate and had not been used for "for any member state's national purposes".

The reports in the Washington Post and Boston Globe newspapers say UN Secretary-General Kofi Annan had obtained evidence of a systematic operation in which American agents were able to listen in to secret communications between Iraqi security bodies responsible for protecting President Saddam Hussein.

Quoting unidentified "confidants" of Mr Annan, the Post said that the UN chief was "alarmed by the implications of the relationship" which, if substantiated, could undermine the neutrality of the organisation.

Annan denies knowledge

Kofi Annan's spokesman Fred Eckhard: The issue is not Richard Butler, the issue is disamament

But the Secretary General's spokesman, Fred Eckhard, told the BBC that he did not believe there was any truth in the reports and said that Mr Annan denied that any associate of his had reported that he had such evidence.

According to the Washington Post Mr Annan received the classified US intelligence about the eavesdropping activities through intermediaries. It said Mr Annan had confronted Richard Butler, head of the Unscom team, with the reports of alleged help received by the US.

"The United Nations cannot be party to an operation to overthrow one of its member states. In the most fundamental way, that is what's wrong with the Unscom,'' the Post's source said.

Further evidence for Baghdad

The BBC's Caroline Wyatt: "Iraq will see these reports with sheer delight"

The BBC's Caroline Wyatt in Baghdad says if these reports are true, they will be a vindication of what Iraq says it has known for some time. She says it is likely to kill off any chances of Unscom returning to Baghdad in its current form.

Iraqi officials have frequently accused Unscom of acting as an intelligence agency on behalf of the US and Israel, a charge denied by the UN. It has also complained about the dominance of US and British officials on the inspection teams.

In another development, a preliminary assessment of damage to civilian facilities caused by the US-led strikes on Iraq - by the UN children's fund Unicef - said a food warehouse, schools, medical and maternity centres and a water supply system had been hit.