The BBC's Foreign Affairs correspondent, James Robbins, reports

A statement by the Iraqi Revolutionary Command Council said Baghdad would adopt "an alternative strategy" and warned of "grave consequences" if sanctions were not lifted, but was not more specific.

An official in Baghdad said Iraq had never produced VX weapons and suggested test results from an American laboratory showing traces of the gas on Iraqi missile fragments had been faked.

Deputy Prime Minister Tariq Aziz said Iraqi scientists had experimented with VX but were unable to turn it into a weapon.

Sanctions will stay, warns US

Bill Clinton reacts to the allegations

United States President Bill Clinton said the new evidence had reinforced his determination to keep United Nations sanctions against Iraq in place.

He said it showed that the US had been right to insist on the UN weapons inspection system.

The US ambassador to the UN, Bill Richardson, also warned that the new allegations could set back Baghdad's campaign to have UN sanctions lifted.

Bill Clinton: "Our position is vindicated"

"If this allegation is correct, that will set back Iraq's efforts to try to lift sanctions," Mr Richardson said. "It shows that they've been deceiving ... and it calls into question their commitment to disarmament."

Iraq impatient

"Iraq sees a window of opportunity": Nick Childs reports from Baghdad

Satisfactory findings from a UN disarmament commission are vital for any lifting of the economic sanctions imposed in August 1990 after Iraq invaded Kuwait.

The sanctions have had a crippling effect on Iraq's economy and food supply.

Iraq has repeatedly said it has dismantled all its banned weapons of mass destruction. It has called for an immediate end to the sanctions and was involved in a protracted stand-off with the UN over the issue earlier this year.

Bill Richardson: doubts about Iraq's commitment

A BBC correspondent in Baghdad says there are now new signs of Iraqi impatience, and the possibility of a new crisis is looming.

The Iraqi media has begun criticising the UN Secretary General Kofi Annan, who defused the last Gulf crisis in February, for not doing enough to get the embargo lifted.

Security Council briefing

BBC correspondent Rob Watson: evidence will emphasise divisions in Security Council

Richard Butler, the head of the UN's weapons inspection team, is to brief the UN Security Council on the inspectors' latest findings on Wednesday.

The BBC correspondent at the UN says the evidence could cause a division in the security council.

Both the US and Britain have said the findings demonstrate that Iraq is not to be trusted and that UN inspections must continue. Russia, France and China are likely to question the accuracy of the evidence.