''The propagandist's purpose," wrote Aldous Huxley, "is to make one set of people forget that certain other sets of people are human." The British, who invented modern war propaganda and inspired Joseph Goebbels, were specialists in the field. At the height of the slaughter known as the First World War, the prime minister, David Lloyd George, confided to C P Scott, editor of the Manchester Guardian: "If people really knew [the truth], the war would be stopped tomorrow. But of course they don't know, and can't know."

What has changed?

"If we had all known then what we know now," said the New York Times on 24 August, "the invasion [of Iraq] would have been stopped by a popular outcry." The admission was saying, in effect, that powerful newspapers, like powerful broadcasting organisations, had betrayed their readers and viewers and listeners by not finding out - by amplifying the lies of Bush and Blair instead of challenging and exposing them. The direct consequences were a criminal invasion called "Shock and Awe" and the dehumanising of a whole nation.

This remains largely an unspoken shame in Britain, especially at the BBC, which continues to boast about its rigour and objectivity while echoing a corrupt and lying government, as it did before the invasion. For evidence of this, there are two academic studies available - though the capitulation of broadcast journalism ought to be obvious to any discerning viewer, night after night, as "embedded" reporting justifies murderous attacks on Iraqi towns and villages as "rooting out insurgents" and swallows British army propaganda designed to distract from its disaster, while preparing us for attacks on Iran and Syria. Like the New York Times and most of the American media, had the BBC done its job, many thousands of innocent people almost certainly would be alive today.

When will important journalists cease to be establishment managers and analyse and confront the critical part they play in the violence of rapacious governments? An anniversary provides an opportunity. Forty years ago this month, Major General Suharto began a seizure of power in Indonesia by unleashing a wave of killings that the CIA described as "the worst mass murders of the second half of the 20th century". Much of this episode was never reported and remains secret. None of the reports of recent terror attacks against tourists in Bali mentioned the fact that near the major hotels were the mass graves of some of an estimated 80,000 people killed by mobs orchestrated by Suharto and backed by the American and British governments.

Indeed, the collaboration of western governments, together with the role of western business, laid the pattern for subsequent Anglo-American violence across the world: such as Chile in 1973, when Augusto Pinochet's bloody coup was backed in Washington and London; the arming of the shah of Iran and the creation of his secret police; and the lavish and meticulous backing of Saddam Hussein in Iraq, including black propaganda by the Foreign Office which sought to discredit press reports that he had used nerve gas against the Kurdish village of Halabja.

In 1965, in Indonesia, the American embassy furnished General Suharto with roughly 5,000 names. These were people for assassination, and a senior American diplomat checked off the names as they were killed or captured. Most were members of the PKI, the Indonesian Communist Party. Having already armed and equipped Suharto's army, Washington secretly flew in state-of-the-art communication equipment whose high frequencies were known to the CIA and the National Security Council advising the president, Lyndon B Johnson. Not only did this allow Suharto's generals to co-ordinate the massacres, it meant that the highest echelons of the US administration were listening in.

The Americans worked closely with the British. The British ambassador in Jakarta, Sir Andrew Gilchrist, cabled the Foreign Office: "I have never concealed from you my belief that a little shooting in Indonesia would be an essential preliminary to effective change." The "little shooting" saw off between half a million and a million people.

However, it was in the field of propaganda, of "managing" the media and eradicating the victims from people's memory in the west, that the British shone. British intelligence officers outlined how the British press and the BBC could be manipulated. "Treatment will need to be subtle," they wrote, "eg, a) all activities should be strictly unattributable, b) British [government] participation or co-operation should be carefully concealed." To achieve this, the Foreign Office opened a branch of its Information Research Department (IRD) in Singapore.

The IRD was a top-secret, cold war propaganda unit headed by Norman Reddaway, one of Her Majesty's most experienced liars. Reddaway and his colleagues manipulated the "embedded" press and the BBC so expertly that he boasted to Gilchrist in a secret message that the fake story he had promoted - that a communist takeover was imminent in Indonesia - "went all over the world and back again". He described how an experienced Sunday newspaper journalist agreed "to give exactly your angle on events in his article . . . ie, that this was a kid-glove coup without butchery".

These lies, bragged Reddaway, could be "put almost instantly back to Indonesia via the BBC". Prevented from entering Indonesia, Roland Challis, the BBC's south-east Asia corres-pondent, was unaware of the slaughter. "My British sources purported not to know what was going on," Challis told me, "but they knew what the American plan was. There were bodies being washed up on the lawns of the British consulate in Surabaya, and British warships escorted a ship full of Indonesian troops down the Malacca Straits so that they could take part in this terrible holocaust. It was only later that we learned that the American embassy was supplying names and ticking them off as they were killed. There was a deal, you see. In establishing the Suharto regime, the involvement of the IMF and the World Bank was part of it . . . Suharto would bring them back. That was the deal."

The bloodbath was ignored almost entirely by the BBC and the rest of the western media. The headline news was that "communism" had been overthrown in Indonesia, which, Time reported, "is the west's best news in Asia". In November 1967, at a conference in Geneva overseen by the billionaire banker David Rockefeller, the booty was handed out. All the corporate giants were represented, from General Motors, Chase Manhattan Bank and US Steel to ICI and British American Tobacco. With Suharto's connivance, the natural riches of his country were carved up.

Suharto's cut was considerable. When he was finally overthrown in 1998, it was estimated that he had up to $10bn in foreign banks, or more than 10 per cent of Indonesia's foreign debt. When I was last in Jakarta, I walked to the end of his leafy street and caught sight of the mansion where the mass murderer now lives in luxury. As Saddam Hussein heads for his own show trial on 19 October, he must ask himself where he went wrong. Compared with Suharto's crimes, Saddam's seem second-division.

With British-supplied Hawk jets and machine-guns, Suharto's army went on to crush the life out of a quarter of the population of East Timor: 200,000 people. Using the same Hawk jets and machine-guns, the same genocidal army is now attempting to crush the life out of the resistance movement in West Papua and protect the Freeport company, which is mining a mountain of copper in the province. (Henry Kissinger is "director emeritus".) Some 100,000 Papuans, 18 per cent of the population, have been killed; yet this British-backed "project", as new Labour likes to say, is almost never reported.

What happened in Indonesia, and continues to happen, is almost a mirror image of the attack on Iraq. Both countries have riches coveted by the west; both had dictators installed by the west to facilitate the passage of their resources; and in both countries, blood-drenched Anglo-American actions have been disguised by propaganda willingly provided by journalists prepared to draw the necessary distinctions between Saddam's regime ("monstrous") and Suharto's ("moderate" and "stable").

Since the invasion of Iraq, I have spoken to a number of principled journalists working in the pro-war media, including the BBC, who say that they and many others "lie awake at night" and want to speak out and resume being real journalists. I suggest now is the time.