The ancient Greek dramatist Aeschylus wrote: "In war, truth is the first casualty." These words are particularly apt in relation to the British Overseas Territory of Diego Garcia, leased to the United States in 1971, where the truth – that a secret "War on Terror" prison existed from 2002 until as recently as 2006 – has been persistently denied by both the British and American governments.

Yesterday, Time magazine reported that a "senior American official" (now retired), who was "a frequent participant in White House Situation Room meetings" after the 9/11 attacks, stated that "a CIA counter-terrorism official twice said that a high-value prisoner or prisoners were being interrogated on the island" in 2002, and possibly 2003. This is the highest-level admission to date that a secret prison existed on Diego Garcia, but it is by no means the first time that the prison's existence has been revealed.

In 2003, Time reported that Hambali, an Indonesian "high-value detainee", who was transferred to Guantanamo in September 2006, was being held on Diego Garcia, and in May this year, El Pais [in Spanish] reported that Mustafa Setmariam Nasar, a joint Syrian-Spanish national who was seized in Pakistan in October 2005, was held on the island in the months after his capture. Unlike Hambali, Nasar's current whereabouts are completely unknown; he is, in effect, one of "America's disappeared."

The reality of Diego Garcia's secret prison has also been confirmed by retired US general Barry McCaffrey in 2004 and 2006, in a report by Swiss Senator Dick Marty for the Council of Europe and in a statement made to the Observer in March this year by Manfred Novak, the UN's special rapporteur on torture. In contrast, the position taken by both the British and American governments occupies a parallel universe, in which the timeless resonance of Aeschylus' words is confirmed.

For five years, since questions were first asked about the secret prison by Lord Wallace of Saltaire in January 2003, the British government refused to acknowledge its existence, and its first denial was indicative of what was to come. "The United States Government," Baroness Amos explained, "would need to ask for our permission to bring any suspects to Diego Garcia. They have not done so and no suspected terrorists are being held on Diego Garcia."

The blanket denials finally came to an end this February, when David Miliband announced that his US counterparts had checked their records and had discovered that two rendition flights, each carrying one prisoner, had passed through Diego Garcia in 2002. He maintained, however, that he had been assured that the planes had only landed for refuelling, and that no prisoner had ever set foot on the island. Mr. Miliband repeated these claims just four weeks ago, after apparently receiving further confirmation from his US counterparts that no other rendition flights had passed through British territory.

The latest revelations about Diego Garcia make it abundantly clear that the British government can no longer accept any kind of "assurances" from its US counterparts regarding the use of the island. Ignoring Aeschylus' sage advice, Ministers have, to put it bluntly, fooled themselves into thinking that ignorance is a substitute for accountability. The truth, of course, is that they are both morally and legally responsible for what takes place on Diego Garcia, and have a duty to address crimes committed on British territory.

As these crimes include kidnapping, "extraordinary rendition" and illegal imprisonment, which are prohibited under domestic UK and international law, and quite possibly torture, which is prohibited under the terms of the UN Convention Against Torture, the British government must immediately initiate a full and open public inquiry into Diego Garcia's true role in the "War on Terror".