By Dan Williams

JERUSALEM, May 15 (Reuters) - Israel developed its own version of a U.S. anthrax vaccine using soldiers for top-secret experiments that, in several cases, caused permanent side effects, an official involved in the project said on Tuesday.

Giora Martinovich, former chief medical officer for the Israeli military, went public after a television expose alleged that several test subjects had developed illnesses and then been neglected by state health services.

Martinovich told Israel Radio that the programme had been ordered amid fears of an anthrax attack by Iraq under Saddam Hussein, and because foreign-made vaccines were not available.

"It seemed clear that the Iraqis would use it (anthrax) against us," he said. "It is not possible to buy, abroad, a large quantity of vaccine, which exists only in the United States or in England. Therefore the state of Israel had to develop its own vaccine."

Anthrax is a deadly bacterial disease and its spores can be used in germ warfare to infect victims. The United States has long required that its troops serving in Iraq, Afghanistan and South Korea be vaccinated against anthrax.

In its own response to the report on Israel's Channel Two television, the Defence Ministry said in a statement that the military had conducted "research in the context of protecting the state of Israel's populace against a strategic threat".

All the subjects were volunteers who had been informed of the risks and could withdraw at will, the ministry said. According to Channel Two, some soldiers developed permanent side-effects. It cited one whose skin was scarred by abscesses.

Martinovich confirmed that "there were some cases of permanent, systemic phenomena, certainly, including the soldier who appeared in that television story". He added that the Defence Ministry was compensating the soldier.

Israel Radio said that the programme ran from 1998 to last year, involved some 700 subjects, and "ended in great success".

Martinovich declined to confirm these details, saying only that Israel's intention was to develop an anthrax vaccine similar to that used by the United States.

"I think that the state of Israel has a very good umbrella against such a threat," he said. "It was an honourable affair for the state of Israel. But like any affair, it also had predictable side-effects."

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