Iraqi Police Service officers said that ammunition, weapons and vehicles earmarked for the IPS are being taken by shock troops at the forefront of Iraq's new dirty counter-insurgency war.

The allegations follow a wide-ranging investigation by this paper into serious human rights abuses being conducted by anti-insurgency forces in Iraq. The Observer has seen photographic evidence of post-mortem and hospital examinations of alleged terror suspects from Baghdad and the Sunni Triangle which demonstrate serious abuse of suspects including burnings, strangulation, the breaking of limbs and - in one case - the apparent use of an electric drill to perform a knee-capping.

The investigation revealed:

· A 'ghost' network of secret detention centres across the country, inaccessible to human rights organisations, where torture is taking place.

· Compelling evidence of widespread use of violent interrogation methods including hanging by the arms, burnings, beatings, the use of electric shocks and sexual abuse.

· Claims that serious abuse has taken place within the walls of the Iraqi government's own Ministry of the Interior.

· Apparent co-operation between unofficial and official detention facilities, and evidence of extra-judicial executions by the police.

The issue of increasing human rights abuses has been raised with the new Iraqi government by the Foreign Office, the US State Department and the United Nations. British Embassy officials in Baghdad have been briefed on the crisis by concerned senior Iraqi officials on several occasions.

The Ministry of Defence confirmed that it has spent £27 million in gift aid on the Iraqi security services, which provided guns, ammunition, and public order equipment such as protective vests and armoured Land Rovers. An MoD source said the majority of this material went to the police. A further £20m went to the police from the government's Global Conflict Prevention Pool, jointly funded by the MoD, the Foreign and Commonwealth Office and the Department for International Development.

Despite that, the British government has, until now, remained silent in public on the issue of the country's widening human rights crisis.

Liberal Democrat defence spokesman Michael Moore called on ministers to make an immediate statement in the House of Commons: 'These are serious reports that go to the heart of the question of the coalition's oversight of the security situation in Iraq. The Foreign Office and the Ministry of Defence must urgently inform Parliament about the scope of their investigation into these allegations,' he said.

The Foreign Office said last night that it was taking the reports of abuse 'very seriously'. It issued detailed responses to the claims: 'We are aware and deeply concerned by reports of detainee abuse by Iraqi police officers and of men in police uniforms committing serious crimes, whether these men are genuine policemen or not. Any abuse of detainees is unacceptable.'

An MoD spokesman told The Observer: 'We are aware of the allegations. We have raised this with the Iraqi government at the highest levels in Baghdad and Basra.'

Privately, there is a growing belief that complaints are being stonewalled.

The investigation raises questions about the British government's commitment to denying aid to governments that tolerate or encourage human rights abuses.

International and Iraqi officials claim the use of torture has become more extensive since the country's first democratically-elected government was sworn in.

Steve Crawshaw of Human Rights Watch,said: 'There has been the attempt to suggest that because Saddam's regime is over now everything is rosy in Iraq. What is happening in official places in Iraq is simply horrific and must be stopped.'

The Foreign Office stressed: 'Any abuse of detainees is unacceptable. As soon as we become aware of any allegations of abuse we raise them at the highest levels in Basra and Baghdad.

'We would expect them to publish the findings of any investigations, prosecute those found to have carried out any abuse, punish those found guilty regardless of rank or background, and take all steps to prevent any recurrence.'