Ministry of Defence scientists say the Iraqi dictator is re-equipping himself with the means to make weapons of mass destruction, including botulinum toxin, a deadly poison.

The plant at Al Daura, near Baghdad, was closed by United Nations inspectors after the Gulf war but Iraq is now preparing it for industrial-scale production.

A private letter sent by a senior member of Saddam's regime to the UN security council says that Iraq "will contact specialist companies with a view to the renovation of the laboratories for the production of foot and mouth vaccine".

The letter, dated March 28, also warns "against attempts by the United States and the United Kingdom to obstruct the renovation of the laboratories".

Whitehall officials say the plant has been used in the past for germ warfare production and experiments.

"We have no reason to trust Saddam and every reason to believe he will subvert the laboratories for military use," said Dr David Kelly, a senior Whitehall official and expert on biological weapons.

UN inspectors discovered in 1995 that Al Daura had made botulinum toxin and conducted research on viral warfare agents including infective haemorraghic conjunctivitis.

In the letter to Kofi Annan, the UN secretary-general, Hamid Yusuf Hammadi, the acting Iraqi foreign minister, insisted that the Al Daura vaccine plant must be rebuilt because of the danger that foot and mouth could spread to the Middle East from Britain and continental Europe.

He blamed Britain and America for an epidemic of the disease in Iraq in 1998 which followed the dismantling of the plant by UN inspectors.

"That caused the loss of 575,421 lambs and calves and the infection of more than 2.5m animals," the letter said.

Concern among officials at the Foreign Office and Ministry of Defence over Iraq's announcement has been heightened by the mystery surrounding the former head of the plant, a British trained scientist.

Dr Hazem Mohammed Ali, who studied virology at Newcastle University before joining Iraq's germ warfare programme as the director of the Al Daura plant, vanished from his job at Baghdad University in 1998.

Ali was a qualified vet in his forties when he came to Britain, funded by the Iraqi military. He spent five years in the virology department at Newcastle studying the way viruses were transmitted in mammals.

Former colleagues described him as quiet but active in a pro-Saddam Iraqi student group. He shared post-graduate accommodation with his wife and two young children and mixed little with other students. Dr Geoff Toms, his PhD supervisor, remembers him as "not among his best students" but shrewd and "very capable".

Ali returned to Iraq in 1987 and three years later was appointed director of the laboratory and manufacturing complex at Al Daura. The plant was built by Mérieux, a French pharmaceutical firm, to manufacture foot and mouth virus for veterinary purposes.

British intelligence lost track of Ali in about 1998. He had resigned from Al Daura to become head of Iraq's Al Razi scientific research institute at Abu Ghraib and later took up a post at Baghdad University.

Because of the dangerous knowledge that he had acquired, there was concern about where he might resurface and whom he might pass his knowledge to. "We kept track of him, then suddenly he disappeared from our radar screens," said an intelligence source. "We would very much like to know where he is."

Under Ali's control and with a staff of about 50 people, Al Daura was adapted to manufacture botulinum toxin, which Saddam planned to use as a battlefield weapon.

"It was part of Saddam's secret programme to develop weapons that could inflict massive damage on his enemies," said Kelly.

Staff at the plant filled missile warheads and bombs with germ weapons using equipment designed for filling milk churns, UN experts believe.

Iraq surrendered in 1991 before the weapons were deployed. The plant's stockpile was later discovered by a UN inspection team.

Ali admitted to the UN team that Iraq was working on camel pox, which causes fever and a rash in camels. Saddam's scientists were suspected of using the disease as a surrogate for smallpox to perform research and refine production methods.

UN inspectors destroyed Al Daura's germ warfare equipment but large parts of the facility were left intact. Recently it was allowed to resume its role as a testing and diagnostic centre for foot and mouth.

The Al Daura plant was built in 1982 with help from the West to combat the spread of foot and mouth throughout the Arab world. French technicians ran the facility during its early years.