On a table in the dimly lit room lay a small white bundle, tied with a silver ribbon. With a brilliant smile and a barked order, Professor Nguyen Thi Phuong had directed me to the morgue of the Tu Du maternity hospital to see the latest evidence of the impact of a war that ended more than 30 years ago.

Outside on the streets, thronged with motor scooters in the 30C heat, young men and women stopped to buy roses from the flower sellers at the hospital gates, preparing to give them to loved ones. In the morgue, an anonymous block at the back of this 1,000-bed hospital, love had had an unexpected, tragic outcome. Somewhere in the hospital, a mother was grieving for the loss of her son.

A porter donned latex gloves and untied the ribbon. Carefully unwrapping the bundle, he revealed a tiny corpse, delivered a few hours earlier, its skin a livid purple, fine black strands of hair plastered to its head. He turned the infant over and there, at the base of the spine where the tissues had failed to form, like a wound, was the unmistakable sign of spina bifida.

This is the only birth defect recognised by the US as a legacy of Agent Orange, the chemical defoliant sprayed by American troops from 1965 until 1971 during the Vietnam war. But there is worse, far worse, in this hospital, the largest in south Vietnam. Some of the most severely affected babies, abandoned by their parents, live on two floors in a wing known as the Peace Village.

Entering it is like stepping back 40 years to the days of Thalidomide, the morning-sickness pill prescribed in Britain in the 1960s that left babies hideously deformed. In the first room, cots line the walls. In one, a four-year-old girl rocks on all fours, gently banging her head against the bars. A nurse turns her round to reveal a face with no eyes. Under a thick fringe of dark hair, there are soft indentations in the skin either side of her nose, where her eyes should be. Above her cot a printed label gives her name as Tran Sinh, and her date of birth as 27 February 2002. According to the nurses she was born in an area heavily sprayed with Agent Orange, where the land is still contaminated 35 years after the spraying stopped.

In the cot next to her, Tran Loan, aged five months, has a head the size of a melon and is whimpering softly. He has hydrocephalus - fluid on the brain. Next to him a child wearing a stripey red T-shirt has stumps for legs. A three-year-old with a crazily pointed skull and bulging eyes lies on his back staring at the ceiling. But for his Mickey Mouse T-shirt, he looks as if he belongs to another world.

A group of less severely affected children are setting off for school. Minh Phlic, 15, binds himself into his artificial legs with his one good arm. "I can be taller than you," he says proudly, levering himself to his feet.

There were 454 babies with congenital defects born in the hospital last year, out of 36,000 deliveries. "Those are just the visible ones. We do not know about defects to internal organs, or those that only emerge years later," Professor Phuong said. The Vietnamese government estimates 500,000 children have been born with birth defects caused by contamination with Agent Orange and two million suffered cancers and other ill effects - innocent victims of a chemical intended to harm plant life, not humans. But unlike the American soldiers who sprayed the defoliant, they have never received compensation.

This month they have the best chance in a generation of obtaining redress. A lawsuit against the US manufacturers of Agent Orange to be heard in the US courts is generating unprecedented support, nationally and internationally.

Agent Orange, so-called because of the orange stripe on the drums in which it was stored, contained dioxin, one of the most toxic chemicals known. An estimated 80 million litres of the defoliant, containing 386kg of dioxin, were sprayed on Vietnam. One millionth of a gram per kilo of body weight is enough to induce cancers, birth defects and other diseases when exposure persists over a long period - as the US veterans discovered in the years after the war.

Cancers, birth defects and other diseases struck the returning veterans in unexpected numbers. Those who had had contact with the chemical sued the manufacturers and in 1984 won what was then the largest ever settlement of $180m against seven of the world's biggest chemical companies, including Dow and Monsanto. But more than 20 years on, while the Americans who did the spraying have been compensated, the Vietnamese who had the toxic chemical sprayed on them are still waiting for redress.

Last year, Vietnamese veterans sued the same US chemical companies claiming that they knew Agent Orange contained a poison - dioxin - and their action in supplying it to the US government breached international law and constituted a war crime. They lost in the first round but they are pinning their hopes on an appeal, due to be heard in Brooklyn, New York, this month.

Dioxin is a by-product of the manufacturing process of Agent Orange and a key issue in the case is how much the manufacturers knew about their product, and at what stage. If the appeal fails, the veterans have pledged to take their fight to the Supreme Court. In the run-up to the hearing, they have turned up the pressure on the US government with a tour of US cities last December, and an international petition co-ordinated from London. An early day motion put down by the Labour MP Robert Marshall-Andrews in the Commons this month calls for the Vietnamese to be "similarly compensated" to the Americans 20 years ago.

The veterans' long campaign for justice has seized the public imagination in Vietnam, according to British diplomats in Hanoi, with fund-raising parties and newspaper campaigns backing the fight. The veterans are ageing - many have died - and there is a sense that time is running out. But there is also anger at the continuing effects of the toxin on current generations.

The mother of the spina bifida baby whose body lay in the morgue of the Tu Du hospital had not been born when the Vietnam war ended. Yet high levels of dioxin remain in the soil in hotspots across southern Vietnam, taken up by plants and crops and leaching into the water to contaminate new generations.

Professor Phuong, 63, consultant obstetrician and until last November medical director of the Tu Du hospital, has spent much of her 40-year career researching the effects of Agent Orange and has watched the rate of birth defects rise. But she admits that obtaining hard evidence linking individual cases to the poison is difficult. "The US soldiers have diaries of where they were sent and what they were doing. We have no data. So how can we have proof?"

Vast areas of Vietnam were stripped bare of vegetation by the defoliant. One of the most contaminated is at Cu Chi, 25 miles outside Ho Chi Minh City, where tourists crawl through the famous network of Viet Cong tunnels. Visitors are shown a film of women picking fruit in what was once known as the Garden of Cu Chi, where office workers came to picnic at weekends and watch the harvest.

Today the picnickers have gone. Slender saplings, no thicker than a man's arm, have grown up in the past 20 years to shade the tourists - but there are no fruit trees and no harvest. In a speech to the US Senate in August 1970, displayed in the War Remnants Museum in Ho Chi Minh City, Senator Nelson said: "Never in human history have people witnessed one country's making war on the living environment of another."

Bien Hoa, two hours' drive to the west along narrow roads jammed with scooters, bicycles and carts, is the site of an old US military base where 7,000 gallons of Agent Orange were spilt during the war. People who live in the town have among the highest levels of dioxin in the country - 413 parts per trillion, 207 times higher than in unsprayed areas. But research on the health effects has never been done and pledges of support from America have come to nothing.

Soldiers standing guard at the base, now operated by the Vietnamese military, turn away unauthorised visitors. As darkness fell at the Quinh Lanh café opposite the gate, where workers were settling down to watch the TV, I bought a bottle of mineral water. It was sourced from the mountains in the north. The water in nearby lake Bien Hung is so heavily contaminated with dioxin, more than 30 years since the spraying stopped, that fishing is still banned.

In Hanoi, Professor Nguyen Trong Nhan, former minister of health and vice-president of the Vietnam Association of Agent Orange Victims, says international support is growing for what he calls Vietnam's "great social and humanitarian problem". In January, a South Korean court ordered US chemical companies to pay $63m compensation to 6,800 South Korean soldiers who fought in Vietnam. "No one can tell how many more generations will be affected. We think the compensation [for Vietnam] must be large. People's lives and health are severely affected. Unfortunately, the Americans have avoided their responsibility," he says.

Aged 76, and a veteran of the war against the French in which he lost his two brothers, he points to a picture of himself meeting Bill Clinton. The former US President in 1996 formally accepted a recommendation from the American Institutes of Medicine that 13 conditions ranging from prostate cancer to peripheral neuropathy (numbness in the hands and feet), should be recognised as likely to have been caused by Agent Orange. That decision led to American veterans with the conditions receiving payments worth thousands of dollars a year while the Vietnamese get nothing. "It is a battle even more difficult than the battle with weapons. We must have confidence that we will win," said Professor Nhan.

There is one major barrier to success. The Vietnamese government is anxious to join the World Trade Organisation to open up new markets for its booming economy, and the Americans are the last big obstacle in their way. Embarrassing the US government at this point could sink Vietnam's hopes.

Portraying their country as poisoned is also not the best way to boost trade. Vietnam is the world's second largest exporter of shrimp to the European Union. Any suggestion of contamination could wipe out this lucrative market. President Tran Duc Luong is thus caught on the horns of a dilemma. During a visit to the US last year, he raised the matter of Agent Orange but did not make an issue of it. The American embassy in Hanoi declined The Independent's request for an interview.

The Americans hoped that concern in Vietnam about Agent Orange would gradually die, along with the ageing war veterans. Instead, the sense of injustice has grown. In Tu Du hospital, and in the 10 Peace Villages across the country where the children with the worst birth defects live, they are pinning their hopes on the outcome of this month's court case.

With a shake of her head, Professor Phuong says: "Please ask for justice for the Vietnam victims. Time is running out."