Britain's role in the torture of its own citizens in Pakistan is condemned today by one of the world's leading human rights organisations as being cruel, counter-productive and in clear breach of international law.

In a damning report, published after an investigation spanning more than a year, Human Rights Watch (HRW) says the government finds itself in a "legally, morally and politically invidious position" through complicity in torture, and warns its moral legitimacy could be undermined.

The report by the New York-based NGO – entitled Cruel Britannia: British Complicity in the Torture and Ill-treatment of Terror Suspects in Pakistan – corroborates many of the findings of the Guardian's own investigation into the mistreatment of people held during British-led counter-terrorism operations.

Furthermore, researchers from HRW have spoken to Pakistani intelligence agents involved in torture who say their British counterparts knew how they were mistreating young British terrorism suspects. These agents said British officials were "breathing down their necks for information" while they were torturing one young medical student from London; and that British intelligence officers were "grateful" they were "using all means possible" to extract information from a man from Luton who was being beaten, whipped, deprived of sleep and threatened with an electric drill.

The report adds that British involvement in the unlawful activities of Pakistani intelligence agents has interfered with attempts to prosecute terrorism suspects in UK courts. It quotes a British intelligence source as saying one of the alleged masterminds of the 2006 airline plot, Rashid Rauf, was badly tortured in Pakistan, and that this had been a disaster that made any successful prosecution in Britain most unlikely.

HRW says that under international law the British government has no option but to investigate, prosecute and punish those who have been complicit in torture, as well as those responsible higher up the chain of command.

"The Convention against Torture requires states to reinforce the prohibition against torture through legislative, administrative, judicial and other measures," the report says. "States are to ensure that all acts of torture are offenses under its criminal law, including complicity or participation in torture. International law places an obligation on states to prevent, investigate, prosecute and punish torture and other ill-treatment. The obligation to prosecute torture includes those who are complicit as well as to those who directly participate in torture, as well as those responsible in the chain of command. A state is obligated to take necessary measures to establish its jurisdiction over acts of torture when the alleged offender is a national of that state or when the victim is a national and the state considers it appropriate."

Failure to do this, it adds, means the government's core values are being "undermined by the official whitewash surrounding the complicity of UK intelligence and security agencies in torture in Pakistan, with ministers repeatedly rejecting calls for an independent judicial inquiry from cross-party parliamentary committees and human rights non-governmental organizations alike".

The Guardian reported earlier this year that an official policy, devised to govern British intelligence officers while interrogating people held overseas, resulted in people being tortured, and that Tony Blair, when prime minister, was aware of the existence of this policy.

The Guardian has repeatedly asked Blair about any role he played in approving the policy, whether he knew it led to people being tortured, whether he personally authorised interrogations that took place in Guantánamo and Afghanistan as well as Pakistan, and whether he made any effort to change the policy. Blair's spokesman responded by saying: "It is completely untrue that Mr Blair has ever authorised the use of torture. He is opposed to it in all circumstances. Neither has he ever been complicit in the use of torture."

When the Guardian pointed out to Blair that it had not suggested he had authorised the use of torture – as opposed to asking him whether he had authorised a policy that led to people being tortured – and that his spokesman had not answered the questions asked, his spokesman replied: "Tony Blair does not condone torture, has never authorised it nor colluded in it. He continues to think our security services have done and continue to do a crucial and very good job."

In today's report, HRW asserts that "UK complicity is clear" because:

• It is inconceivable that the UK government was unaware of the systematic use of torture in Pakistan.

• UK officials engaged in acts that virtually required they knew about the use of torture in specific cases.

• UK officials supplied questions and lines of inquiry to Pakistan intelligence sources in cases in which detainees were tortured.

Officials from two Pakistani intelligence agencies, Inter-Services Intelligence (ISI) and the Intelligence Bureau (IB),k told HRW that British officials were well aware of how they had mistreated British terrorism suspects. An IB official involved in the interrogation in Karachi in August 2005 of the medical student from London is quoted as saying: "I do not know if the British knew we had given him a good thrashing and 'the treatment'. But they know perfectly well we do not garland terrorism suspects nor honour them. We do what we do and it's not pretty. And with them breathing down our necks for information from Runnymede [the British Deputy High Commission in Karachi is known as Runnymede Estate] and the ISI eager to take over our turf and our suspect, we would naturally be keen to produce results. Results are not produced by having chats with the suspect."

This man was questioned by British intelligence officers after being tortured. He was eventually released without charge and is now practising medicine in the south of England. He remains deeply traumatised.

A Pakistani official involved in the torture of Zeeshan Siddiqui, also from London, told HRW that an account Siddiqui gave of being beaten, drugged and forcibly catheterised before being questioned by British intelligence officers – while still in a traumatised state – was "essentially accurate" and part of "standard practices".

The official said Siddiqui was detained at the request of MI6, whose officers were aware that he was being processed in the "traditional way". He said the British were effectively interrogating Siddiqui while the IB processed him. He added that British emotions were running high at the time. Siddiqui was also released without charge and subjected to a control order on his return to the UK. He has since absconded.

Officials from a number of Pakistani agencies involved in the detention and torture of Rangzieb Ahmed, from Rochdale, in 2006, have confirmed to HRW the overall authenticity of his claims. Ahmed says he was beaten and whipped, and three fingernails were ripped from his left hand after MI5 and Greater Manchester police drew up questions that were put to him by his torturers. HRW reports that Pakistani officials say British intelligence services were aware of his detention and treatment at all times.

HRW says Pakistani intelligence officers also confirmed the account of torture given by Salahuddin Amin, from Luton, who says he was beaten, whipped, deprived of sleep and threatened with an electric drill. He was questioned 11 times by MI5 officers during 10 months in ISI custody. On deportation to the UK, an Old Bailey judge ruled that Amin's mistreatment had been physically oppressive but fell short of torture. However, Pakistani intelligence officers told Human Rights Watch Amin's account was essentially accurate.

The report says: "These sources said that Amin's was a 'high pressure' case and that the UK and US governments' desire for information from him was 'insatiable'. The sources added that both governments' agents who were 'party' to Amin's detention were 'perfectly aware that we were using all means possible to extract information from him and were grateful that we were doing so' ".

Ahmed and Amin were both prosecuted for terrorism offences after being deported to the UK and are both now serving life.

Last month Jonathan Evans, the director-general of MI5, defended the organisation's co-operation with intelligence agencies known to use torture, saying it had helped thwart many terrorist attacks after 9/11 and had saved British lives. He said in a speech: "In my view we would have been derelict in our duty if we had not worked, circumspectly, with overseas liaisons who were in a position to provide intelligence that could safeguard this country from attack. Were we to refuse to deal with them, accepting that in so doing we would be cutting off a potentially vital source of information that would prevent attacks in the west?"

The HRW report says that as long as the government asserts its duty to act upon intelligence extracted under torture if to do so may save lives, it must proactively and strenuously intervene to prevent mistreatment by friendly intelligence agencies. "In countries like Pakistan where there is a high likelihood of torture taking place, the UK should take special steps to prevent torture and to avoid being placed in the legally, morally and politically invidious position the UK government now finds itself."

A Foreign Office spokesperson said: "The government rejects in the strongest possible terms the suggestion that a policy of complicity in torture has been in place. The report's allegations are not new and we have responded to them in parliament. We have taken a leading role in international efforts to eradicate torture.There is no truth in suggestions that the Security and Intelligence Services operate without control or oversight. There is no truth in the more serious suggestion that it is our policy to collude in, solicit, or even directly participate in abuses of prisoners. Nor is it true that alleged wrong-doing is covered up." The spokesperson also maintained that some of the cases detailed by HRW had been considered and rejected by the UK courts.

HRW's recommendations

The British government should:

• Order a full and independent public inquiry with subpoena powers to establish whether British security services have been complicit in torture or other ill-treatment in Pakistan and elsewhere.

• Adopt measures to address the criticism of the government's counter-terrorism policy, including in reports by the parliamentary joint human rights committee and the House of Commons Foreign affairs committee, so as to ensure that British policy and practices on counterterrorism meet the UK's international obligations regarding torture or other ill-treatment.

• Investigate allegations of complicity by the British security services in the torture and ill-treatment of terrorism suspects in Pakistan. Where sufficient evidence of wrongdoing exists, prosecute those responsible, regardless of position or rank.

• Publish without delay current and past guidance to the intelligence services on the interrogation of suspects overseas.

• While cooperating with Pakistan on counter-terror and law enforcement activities, take all necessary measures to ensure that torture and ill-treatment of suspects or others is not used, and act to stop it should it occur.