LONDON, Nov 18 (Reuters) - The head of the British army has warned that underfunding and wars in Iraq and Afghanistan have left his troops feeling "devalued and angry", according to a report in the Sunday Telegraph newspaper.

General Sir Richard Dannatt, chief of general staff, said the level of operations to which Britain is committed was unsustainable, the newspaper reported, citing an internal report.

He also said the army was undermanned and that increasing numbers of troops were disillusioned.

Britain's involvement in the wars in Iraq and Afghanistan has brought criticism by soldiers and opposition politicians that the Labour government has failed to provide adequate supplies in battle and support for families and injured soldiers at home.

Dannatt said in the report that the government's military covenant with the army was clearly out of kilter and called for better pay, accommodation and medical care.

A spokesman for the Ministry of Defence said the report contained unedited views of individual soldiers, "some of which...are isolated views."

The ministry also issued a separate comment from Dannatt in which he said the military covenant was not broken and added: "In response to our concerns we have had some welcome news this year on medical treatment, equipment, pay and improvements in accommodation."

But the Sunday Telegraph quoted him as saying operations in Iraq and Afghanistan were putting soldiers and their families under great pressure and their long-term impact was damaging and "mortgaging the goodwill of our people".

The report said that a lack of funding, resources and manpower were forcing defence chiefs to make decisions such as sending "medically downgraded" or injured troops to guard the Falkland Islands in order to free up healthy soldiers for other operations.

The newspaper said the report warned that "the tank of goodwill now runs on vapour; many experienced staff are talking of leaving".

Dannatt's document was based on months of interviews with thousands of soldiers and their families, the Sunday Telegraph said.

In a separate Sunday Telegraph article, Defence Secretary Des Browne said concerns that the covenant between the government and the army was broken were wrong.

"That does not mean that we, the government, cannot do better," he said. "But the truth is that we strive constantly to ensure that the armed forces have the best possible package of care."

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