The discovery, to be detailed at the United Nations, will strengthen the hand of the United States in maintaining tough economic sanctions on Iraq when the issue is taken up by the Security Council on Thursday, said the official, who spoke on condition of anonymity.

In New York, meanwhile, well-informed diplomatic sources also confirmed that Iraq had placed the nerve gas in its warheads, a development in missile power that Iraq consistently claimed it had failed to accomplish.

The sources, speaking on condition of anonymity, said Richard Butler, chief of the UN inspection team, reported to the Council last week that Iraq had been told about ``the preliminary results of the chemical analysis of certain excavated remnants of special warheads.'' The Iraqi side rejected these results, thesources said.

Both sides agreed to continue further discussions on this issue. When informed of the Commission's concerns, Iraq refused to undertake additional steps to clarify the extent of its attempts to produce the chemical warfare agent VX. In Baghdad, Deputy Prime Minister Tariq Aziz said Iraqi scientists had experimented with VX but were unable to turn it into a weapon. He said in a letter to the Security Council that 1.7 tonnes of the agent had been produced but it was not of weapons grade, according to the official Iraqi news agency.

Aziz's letter said Iraq had provided weapons inspectors with proof of its claim. But inspectors are ``demanding more documents to prove that the production of the...agent was a failure,'' Aziz said.

The Washington Post reported the discovery of nerve gas fragments in missile warheads today. Sources confirmed the finding to the Associated Press.

State Department spokesman James P Rubin said, ``It appears to be another case of UNSCOM (the UN Special Commission)having overcome Iraq's deceit on what it has done and it is doing.''

He called Iraq's concealment of weaponising warheads with nerve gas ``another in a long series of examples of Iraq's determined program of deceit,'' and added that it demonstrated how important it was for sanctions to remain in place until Iraq cooperated with UNSCOM.

Diplomatic sources in New York, meanwhile, said Iraq had refused to clarify to UN inspectors the extent of its attempts to produce the chemical warfare agent. UN officials, also speaking on condition of anonymity, said they feared that instead of reacting negatively toward Iraq, Baghdad's supporters on the Security Council France, Russia and China would instead cite the report as an example of political leaks by the Special Commission, which is supposed to report only to the Council.

According to the Post, the information on the nerve gas is included in a confidential US Army laboratory analysis of warhead fragments taken from a pit at Taji, Iraq, in March.

Thenewspaper said it obtained a copy of the report from the Iraqi National Congress, the principal Iraqi exile group, and confirmed the findings with diplomatic sources.