The scale of safety problems inside Britain's nuclear power stations has been revealed for the first time in a secret report obtained by the Observer that shows more than 1,750 leaks, breakdowns or other "events" over the past seven years.

The damning document, written by the government's chief nuclear inspector, Mike Weightman, and released under the Freedom of Information Act, raises serious questions about the dangers of expanding the industry with a new generation of atomic plants. And it came as the managers of the UK's biggest plant, Sellafield, admitted they had finally halted a radioactive leak many believe has been going on for 50 years.

The report discloses that between 2001-08 there were 1,767 safety incidents across Britain's nuclear plants. About half were subsequently judged by inspectors as serious enough "to have had the potential to challenge a nuclear safety system". They were "across all areas of existing nuclear plant", including Sellafield in Cumbria and Aldermaston and Burghfield in Berkshire, says Weightman, chief inspector of the Nuclear Installations Inspectorate (NII).

In an accident at Sizewell A in Suffolk in January 2007, cooling water leaked from a pond containing highly radioactive spent fuel. The operator was not prosecuted for breaching safety rules, according to the NII's official investigation, partly because NII resources were "stretched".

In May 2007 a manhole at Dounreay in northern Scotland was found to be contaminated with plutonium. A series of other incidents occurred at Sellafield, including a fault with a trap door meant to provide protection from highly radioactive waste in September 2008, and the contamination of five workers at a plutonium fuel plant in January 2007.

A spokesman for Sellafield confirmed last night it had successfully halted the seeping of liquid from a crack in one of four waste tanks that used to process effluent before it was discharged into the Irish Sea. Some local residents say it started half a century ago.

In January, Weightman sent a 37-page report to the Health and Safety Executive (HSE). Marked "restricted", it lays bare the crisis afflicting the regulation of the British nuclear industry.

The NII has had to oversee such problems despite an acute shortage of experienced staff. It admits to being 26 inspectors short of the 192 it needs to regulate existing facilities, and its ratio of inspectors to nuclear plant is a third of the international average and far below that of Mexico, Spain or South Korea.

To assess new reactor designs, Weightman says he needs a further 36 inspectors, to bring the complement up to 228 by 2011. But he has "struggled" to recruit new staff and the "lack of build-up of resources to date" could jeopardise the government's target date of 2017 for deploying new reactors.

Weightman says the NII faces "major challenges" to ensure old nuclear plants are run or dismantled safely at the same time as checking new plants are safe to build because of staff shortages. He proposes possible collaboration with China on assessing new reactor designs, hiring French inspectors on secondment and greater use of third-party contractors.

The HSE wants to streamline the assessment of new reactor designs by waiving certain aspects through a series of "exclusions". A recent consultation document circulated by Kevin Allars, director of new nuclear build generic design assessment at the HSE, suggests allowing reactor designs to be agreed with certain "exclusions" and "conditions" that could be revisited later.

Emma Gibson, senior climate and energy campaigner at Greenpeace, has rejected this course of action. In a letter to Allars, she writes: "We do not agree that a regulator should, even in an informal voluntary process, approve any part of the design, 'excluding' features which may be vital to its safety. The risk is that this will bypass or emasculate essential stages in the regulatory process."

The HSE said last night that the NII was continuing to "fulfil its regulatory duties" and was upping the number of inspectors and bringing in appropriately experienced technical support contractors to increase regulatory resources.

"The UK approach to nuclear safety regulation is different to most countries. Rather than employing large numbers of staff to set regulations for the industry to comply with, NII sets general targets for the industry (reducing risks as low as reasonably practicable) which it then regulates through ... issuing licences with strict safety conditions attached."

It said the proposed use of exclusions was no different from the proportionate approach NII had always taken with its regulation of new projects.

But it is not only environmentalists who have expressed concerns. "Britain's nuclear inspectors are facing serious problems with serious implications," said an independent nuclear engineer, John Large. "Some of these incidents were potentially disastrous. We already have evidence that their staffing crisis is compromising their regulation of nuclear safety. Without a strong and effective regulator, the risk of a large release of radioactivity increases."

But John McNamara, the spokesman for the 175-member Nuclear Industry Association, still argues that the industry's safety record is "second to none". There was a "highly professional and transparent regulatory approach", he said. "A thorough review into nuclear regulatory resourcing as part of the government's policy on delivering new nuclear build is under way."