A secret report on the chequered history of priceless Aramaic bowls loaned to a leading university has exposed an apparent attempt to cover up UK academic connections to a potentially deadly trade in stolen Iraqi antiquities.

The findings of the study, which was suppressed by a controversial legal agreement in 2007, have at last solved a long-standing archaeological mystery.

Commissioned by University College London in 2005, it confirms the expert view that the bowls were stolen from the historical site of Babylon and should be returned to Iraq or handed over to the police. The report was completed in 2006 but suppressed a year later in a legal settlement made between the university and the putative owner of the bowls, the multimillionaire Norwegian collector, Martin Schøyen.

But a copy of its findings recently placed in the House of Lords library reveals that specialists in archaeology are convinced that the incantation bowls, dating from the fifth to eighth centuries, must have come from Iraq illegally. They believe the rare finds were probably dug up from the remains of Babylon some time after the 1991 Gulf war and were not found in Jordan, as believed by Schøyen. The UCL report concludes that "the bowls are subject to the Iraq United Nations sanctions order 2003 as cultural objects illicitly removed from Iraq after 6 August 1990 and that UCL has therefore a duty to deliver them to a constable".

The learned team of academics and researchers who worked on the report concluded that both the university and Schøyen were guilty of not showing enough curiosity about the source of the 654 bowls, although it is not suggested that Schøyen knew they might have been looted when he bought them. The team recommended they be returned immediately and asked for the findings to be made public. But in 2007 the report's three authors were made to keep quiet about their conclusions and UCL paid an undisclosed sum of compensation to Schøyen. The authors are believed to have been unhappy about the legal gag.

This weekend one of them, UCL's director of museums and collections, Sally McDonald, said she was unable to comment further on the report. At a press conference in June 2007 UCL and Schøyen released a joint statement that now appears to be a misrepresentation of the report's findings. It read: "In 2003 questions were raised in the media with regard to the origin of these bowls, as a result of which UCL, with the agreement of the Schøyen Collection, initiated an inquiry into their provenance.

"Following a searching investigation by an eminent panel of experts, and further inquiries of its own, UCL is pleased to announce that no claims adverse to the Schøyen Collection's right and title have been made or intimated."

But one of the suppressed report's two other authors, the Cambridge academic Lord Renfrew of Kaimsthorn, has called for the Iraqi government to demand the return of the bowls or to threaten to sue UCL and Schøyen. "It is reasonably clear the bowls left Iraq in recent years, and I expect that the Iraqi government will be in contact with the British government to demand their return," he said. "It is very important that the continued looting of antiquities ceases, and for that to happen wealthy collectors and museums have to stop buying them."

Professor Peter Stone, a Newcastle University expert in looted Iraqi antiquities, argues that the trade in stolen pieces is potentially even more dangerous, putting lives in peril as well as the archaeological legacy of the region.

"This is the first I have heard about the real contents of this UCL report," he said. "The bowls themselves have already lost about 70% of their archaeological value because they have been removed from their geographical context. They are now chiefly valuable as objects of art history. But stopping the trade in these looted objects remains crucial. As the US Marines have recently pointed out, there is a strong case that the money made by illegally digging up artefacts in historic sites is being used to buy guns for the insurgent forces."

The incantation bowls, which were placed above doorways by Mesopotamian Jews as spiritual protection, are thought to be in a UCL store in London or Kent and cannot be used for research. They were borrowed from Schøyen in 1996 by Professor Mark Geller of UCL's Institute of Jewish Studies in an informal arrangement to allow the bowls to be catalogued by experts. A decade later Schøyen, probably the world's greatest private collector of manuscripts and texts, began proceedings against UCL for failing to return the bowls as agreed.

He stated: "The Schøyen Collection has become frustrated with the waste of time and money caused by a lengthy and inconclusive inquiry into provenance and with the spurious reasons given for not returning the bowls."

The UCL report was suppressed as part of the legal settlement of this case.