Speaking at a congressional hearing on the use of misleading information, an emotional Ms Lynch described how she suffered horrific injuries when her vehicle was hit by a rocket near the Iraqi town of Nasiriya in March 2003, killing several of her companions.

The US military has come under criticism for allegedly spinning stories from Iraq and Afghanistan. The hearing is also looking at the case of the American football star-turned-solider Pat Tillman, who died in a friendly fire incident in Afghanistan in 2004.

The Pentagon initially put out the story that Private Lynch - a slight woman who was just 19 at the time - had been wounded by Iraqi gunfire but kept fighting until her ammunition ran out. In fact, her gun had jammed and she did not fire a shot.

A video of US commandos carrying her from a Nasiriya hospital was released at the height of the conflict.

Ms Lynch has criticised Pentagon efforts to use her for propaganda purposes before. But her appearance today, before the House committee on oversight and government reform, chaired by an ardent Bush administration critic, congressman Henry Waxman, inevitably will take on a political dimension at a time when the White House is under strong pressure on Iraq.

Mr Bush today reiterated his pledge to veto a funding bill, approved by the Democratic-controlled Congress, that sets a deadline of next April for US troops to withdraw.

Ms Lynch criticised the Pentagon, saying: "I'm still confused why they lied and tried to make me into a legend." Ms Lynch said the real heroes were those who died in the attack and those who rescued her.

Initial reports also suggested that Ms Lynch had been abused after she came round in the hospital. She said the reports were lies: she had been treated well and the Iraqis had tried to return her to US forces.

"The nurses tried to soothe me and return me," she told the hearing, adding that she objected to the way in which the US military had portrayed her.

"American people don't need to be told elaborate tales" about US forces, she said.

Pat Tillman's relatives were not told of the true circumstances of his death until five weeks after his funeral. The Pentagon initially informed them that he had died while storming an enemy position, a version it quickly realised was wrong.

Private Tillman's death received worldwide attention because he had turned his back on a $3.7m (£2m) contract with the NFL team the Arizona Cardinals to enlist in the forces after the September 11 2001 attacks.

In a report in March, the Pentagon's inspector general said Mr Tillman's relatives had not been told the truth even though commanders knew soon after his death that he had probably been killed by fellow soldiers.

He recommended that action be taken against nine officers, including a number of generals, but found no evidence of criminal wrongdoing or any deliberate cover-up.

The committee issued its first subpoena since Democrats took power and Mr Waxman became committee chairman. Dr Gene Bolles, the neurosurgeon who treated Ms Lynch in Germany after she had been rescued in Iraq, was the target of the subpoena.