Despite the six years of bitter fighting which lay behind him, James Morgan-Jones, a major in the Royal Artillery, could not have been more specific about the spectacle in front of him. "It was," he reported, "one of the most disgusting sights of my life."

Curled up on a bed in a hospital in Rotenburg, near Bremen, was a cadaverous shadow of a human being. "The man literally had no flesh on him, his state of emaciation was incredible," wrote Morgan-Jones. This man had weighed a little over six stones (38kg) on admission five weeks earlier, and "was still a figure which may well have been one of the Belsen inmates". At the base of his spine "was a huge festering sore", and he was clearly terrified of returning to the prison where he had been brought so close to death. "If ever a man showed fear - he did," Morgan-Jones declared.

Adolf Galla, 36, a dental technician, was not alone. A few beds away lay Robert Buttlar, 27, a journalist, who had been admitted after swallowing a spoon handle in a suicide attempt at the same prison. He too was emaciated and four of his toes had been lost to frostbite.

The previous month, January 1947, two other inmates, Walter Bergmann, 20, and Franz Osterreicher, 38, had died of malnutrition within hours of arriving at the hospital. Over the previous 13 months, Major Morgan-Jones learned, 45 inmates of this prison, including several women, had been dumped at Rotenburg. Each was severely starved, frostbitten, and caked in dirt. Some had been beaten or whipped.

The same week that Major Morgan-Jones was submitting his report, a British doctor called Jordan was raising similar concerns at an internment camp 130 miles away. Dr Jordan complained to his superiors that eight men who had been transferred from the same prison "were all suffering gross malnutrition ... one in my opinion dying".

They included Gerhard Menzel, 23, a 6ft German former soldier who weighed seven stones, and was described as a living skeleton. Another, admitted as Morice Marcellini, a 27-year-old Frenchman, later transpired to be Alexander Kalkowski, a captain in the Soviet secret police, the NKVD. He weighed a little over eight stones, and complained that he had been severely beaten and forced to spend eight hours a day in a cold bath.

Prisoners complained thumbscrews and "shin screws" were employed at the prison and Dr Jordan's report highlighted the small, round scars that he had seen on the legs of two men, "which were said to be the result of the use of some instrument to facilitate questioning". One of these men was Hans Habermann, a 43-year-old disabled German Jew who had survived three years in Buchenwald concentration camp.

All of these men had been held at Bad Nenndorf, a small, once-elegant spa resort near Hanover. Here, an organisation called the Combined Services Detailed Interrogation Centre (CSDIC) ran a secret prison following the British occupation of north-west Germany in 1945.

CSDIC, a division of the War Office, operated interrogation centres around the world, including one known as the London Cage, located in one of London's most exclusive neighbourhoods. Official documents discovered last month at the National Archives at Kew, south-west London, show that the London Cage was a secret torture centre where German prisoners who had been concealed from the Red Cross were beaten, deprived of sleep, and threatened with execution or with unnecessary surgery.

As horrific as conditions were at the London Cage, Bad Nenndorf was far worse. Last week, Foreign Office files which have remained closed for almost 60 years were opened after a request by the Guardian under the Freedom of Information Act. These papers, and others declassified earlier, lay bare the appalling suffering of many of the 372 men and 44 women who passed through the centre during the 22 months it operated before its closure in July 1947.

They detail the investigation carried out by a Scotland Yard detective, Inspector Tom Hayward, following the complaints of Major Morgan-Jones and Dr Jordan. Despite the precise and formal prose of the detective's report to the military government, anger and revulsion leap from every page as he turns his spotlight on a place where prisoners were systematically beaten and exposed to extreme cold, where some were starved to death and, allegedly, tortured with instruments that his fellow countrymen had recovered from a Gestapo prison in Hamburg. Even today, the Foreign Office is refusing to release photographs taken of some of the "living skeletons" on their release.

Initially, most of the detainees were Nazi party members or former members of the SS, rounded up in an attempt to thwart any Nazi insurgency. A significant number, however, were industrialists, tobacco importers, oil company bosses or forestry owners who had flourished under Hitler.

By late 1946, the papers show, an increasing number were suspected Soviet agents. Some were NKVD officers - Russians, Czechs and Hungarians - but many were simply German leftists. Others were Germans living in the Russian zone who had crossed the line, offered to spy on the Russians, and were tortured to establish whether they were genuine defectors.

One of the men who was starved to death, Walter Bergmann, had offered to spy for the British, and fell under suspicion because he spoke Russian. Hayward reported: "There seems little doubt that Bergmann, against whom no charge of any crime has ever been made, but on the contrary, who appears to be a man who has given every assistance, and that of considerable value, has lost his life through malnutrition and lack of medical care".

The other man who starved to death, Franz Osterreicher, had been arrested with forged papers while attempting to enter the British zone in search of his gay lover. Hayward said that "in his struggle for existence or to get extra scraps of food he stood a very poor chance" at Bad Nenndorf.

Many of Bad Nenndorf's inmates were there for no reason at all. One, a former diplomat, remained locked up because he had "learned too much about our interrogation methods". Another arrived after a clerical error, and was incarcerated for eight months. As Inspector Hayward reported: "There are a number against whom no offence has been alleged, and the only authority for their detention would appear to be that they are citizens of a country still nominally at war with us."

Today, the older people of Bad Nenndorf talk about August 1 1945, the day the British arrived, with undisguised bitterness. A convoy of trucks pulled into the village, and the Tommies took over from an easygoing US infantry division. Within hours, the British had ordered everybody in the centre of the village to pack their belongings and leave. Bad Nenndorf was heaving with refugees from the bomb-ravaged ruins of Hanover, 18 miles to the east: hundreds of people were given 90 minutes to pack some food and valuables, and get out.

"We thought everyone would be allowed back in a few days," recalls Walter Münstermann, now a retired newspaperman, but then a 14-year-old. "Then the soldiers started putting barbed wire fences around the centre of the village, and slowly we began to realise that this was going to be no ordinary camp."

Walter and his neighbours realised that the centre of their village was being transformed into a prison camp when they heard that the British were converting a large, 40-year-old bath-house, ripping out the baths and installing heavy steel doors to turn each cubicle into a cell. They saw the first batch of prisoners arrive in the back of a truck. Later groups arrived at the village railway station in cattle trucks.

Ingrid Groth, then a seven-year-old, said locals claimed that if you crept up to the barbed wire at night, you could hear the prisoners' screams. Mr Münstermann, who passed the main gate on his way to school each day, insists that the opposite was true: that it was a sinister place precisely because "you never, ever saw anyone, and you never heard a sound". Among the people of Lower Saxony, Bad Nenndorf became known as das verbotene dorf - the forbidden village.

The commanding officer was Robin "Tin Eye" Stephens, 45, a monocled colonel of the Peshawar Division of the Indian Army who had been seconded to MI5 in 1939, and who had commanded Camp 020, a detention centre in Surrey where German spies had been interrogated during the war.

An authoritarian and a xenophobe with a legendary temper, Stephens boasted that interrogators who could "break" a man were born, and not made. Of the 20 interrogators ordered to break the inmates of Bad Nenndorf, 12 were British, a combination of officers from the three services and civilian linguists. The remaining eight included a Pole and a Dutchman, but were mostly German Jewish refugees who had enlisted on the outbreak of war, and who, Inspector Hayward suggested, "might not be expected to be wholly impartial".

Most of the warders were soldiers barely out of their teens. Some had endured more than a year of combat, at the end of which they had liberated Belsen. Some represented the more unruly elements of the British Army of the Rhine, sent to Bad Nenndorf after receiving suspended sentences for assault or desertion. Often, Hayward said, they were the sort of individuals "likely to resort to violence on helpless men".

The inmates were starved, woken during the night, and forced to walk up and down their cells from early morning until late at night. When moving about the prison they were expected to run, while soldiers kicked them. One warder, a soldier of the Welsh Regiment, told Hayward: "If a British soldier feels inclined to treat a prisoner decently he has every opportunity to do so; and he also has the opportunity to ill-treat a prisoner if he so desires".

The Foreign Office briefed Clement Attlee, the prime minister, that "the guards had apparently been instructed to carry out physical assaults on certain prisoners with the object of reducing them to a state of physical collapse and of making them more amenable to interrogation".

Former prisoners told Hayward that they had been whipped as well as beaten. This, the detective said, seemed unbelievable, until "our inquiries of warders and guards produced most unexpected corroboration". Threats to execute prisoners, or to arrest, torture and murder their wives and children were considered "perfectly proper", on the grounds that such threats were never carried out.

Moreover, any prisoner thought to be uncooperative during interrogation was taken to a punishment cell where they would be stripped and repeatedly doused in water. This punishment could continue for weeks, even in sub-zero temperatures.

Naked prisoners were handcuffed back-to-back and forced to stand before open windows in midwinter. Frostbite became common. One victim of the cold cell punishment was Buttlar, who swallowed the spoon handle to escape. An anti-Nazi, he had spent two years as a prisoner of the Gestapo. "I never in all those two years had undergone such treatments," he said.

Kalkowski, the NKVD officer, claimed that toenails were ripped out and that he had been hung from his wrists during interrogation, with weights tied to his legs. British NCOs, he alleged, would beat him with rubber truncheons "while the interrogating officers went for lunch". Hayward concluded, however, that "there was not a shred of evidence to support these allegations".

Whatever was happening during the interrogations must have been widely known among many of the camp's officers and men. In common with every CSDIC prison, each cell was bugged, so that the prisoners' private utterances could be matched against their "confessions".

Inspector Hayward's investigation led to the courts martial of Stephens, Captain John Smith, Bad Nenndorf's medical officer, and an interrogator, Lieutenant Richard Langham. The hearings were largely held behind closed doors. A number of sergeants - men who had carried out the beatings - were told they would be pardoned if they gave evidence against their officers.

Langham, who had been born in Munich and fled to England with his parents in 1934, at the age of 13, denied that he had mistreated prisoners and was acquitted. Charges of manslaughter against Smith were dropped but, after a court martial held entirely in secret, he was found guilty of the neglect of inmates and sentenced, at the age of 49, to be dismissed the service.

It is unclear whether any of Stephens's superiors knew, or condoned, what had happened at Bad Nenndorf, although his lawyers said they were prepared to spread the blame among senior army officers and Foreign Office officials. Before his court martial began there was nervous debate among ministers and government officials about how to avoid the repercussions which would follow, should the truth become known.

Ministers were anxious that nobody should learn that CSDIC was running a number of similar prisons in Germany. There was also what the chancellor of the Duchy of Lancaster, Frank Pakenham, later to become Lord Longford, described as "the fact that we are alleged to have treated internees in a manner reminiscent of the German concentration camps". The army, meanwhile, said it was determined the Soviets should not discover "how we apprehended and treated their agents", not least because some would-be defectors might have second thoughts.

Finally, there was the inevitable fall-out for Attlee's Labour government. As Hector McNeill, foreign minister, pointed out in a memo to Ernest Bevin, the foreign secretary: "I doubt if I can put too strongly the parliamentary consequences of publicity. Whenever we have any allegations to make about the political police methods in Eastern European states it will be enough to call out in the House 'Bad Nenndorf', and no reply is left to us."

Stephens was eventually court martialled behind closed doors. Amid complaints of a half-hearted prosecution, he was acquitted of two charges, two others were withdrawn, and he was free to apply to rejoin MI5.

In Bad Nenndorf, the remaining prisoners were shipped out, the wire ripped down, and the prison shut down. The baths were reinstalled in the cubicles and, gradually, the spa returned to its traditional business of catering for the health needs of elderly German tourists.

The closure of Bad Nenndorf was not the end of the story, however. The archives reveal that three months later a custom-built interrogation centre, with cells for 30 men and 10 women, was opened near to the British military base at Gütersloh. The inmates were to be suspected Soviet spies, and would be medically examined before interrogation.

When Frank Pakenham complained that most of the interrogators had been at Bad Nenndorf, and demanded that "drastic methods" should not be employed, Major-General Sir Brian Robertson, the military governor, put his foot down.

Why, he exclaimed, if the military authorities were required to justify the arrest of each inmate, and then handle them according to the standards "enforced by the prison commissioners in our own enlightened country", there was little point in having an interrogation centre at all.

Death subterfuge

One of the most bizarre episodes at Bad Nenndorf followed the death of a former SS officer called Abeling. He had been so severely beaten during his arrest in January 1947 that he was unconscious on arrival at the prison, and died shortly afterwards.

The camp's officers instructed a local gravedigger to prepare a grave for a British officer who had died of an infectious disease. Abeling's corpse was sewn into a blanket, lowered in, and covered with quicklime. A firing party was on hand to ensure that the dead man was buried with full British military honours, and a white wooden cross with a false name was erected over the grave.

The reasons for such subterfuge are made clear in declassified Foreign Office papers at the National Archives. Abeling, formerly a member of an "annihilation squad" in Warsaw, had been working as an agent for the Americans at the time of his death, spying on his old Nazi comrades under the codename Slim.

The report notes that the Americans "insisted that 'Slim's' death must be kept a very closely guarded secret, because of the fact that the US authorities had been employing him in the full knowledge that he was wanted by the Polish government as a major war criminal".

Today the wooden cross over Abeling's grave has been replaced with a gravestone. It still bears the name of the man that local people believe to be buried there: John X White, born 1.8.1911, died 17.1.1947.