1,625 UN and US inspectors spent two years searching 1,700 sites at a cost of more than $1bn. Yesterday they delivered their verdict

Saddam Hussein destroyed his last weapons of mass destruction more than a decade ago and his capacity to build new ones had been dwindling for years by the time of the Iraq invasion, according to a comprehensive US report released yesterday.

The report, the culmination of an intensive 15-month search by 1,200 inspectors from the CIA's Iraq Survey Group (ISG), concluded that Saddam had ambitions to restart at least chemical and nuclear programmes once sanctions were lifted.

However, concrete plans do not appear to have been laid down, let alone set in motion. Nor did Saddam issue direct verbal orders to develop weapons of mass destruction (WMD). The main evidence of his intentions are his own cryptic remarks, and the meaning his aides inferred from them.

The ISG conclusions, delivered to Congress yesterday, are badly timed for George Bush's re-election bid, as they starkly contradict his pre-war claims as well as statements he has made on the campaign trail.

Even in recent days the president has insisted that, although Iraq had no WMD at the time of the war, it was a "gathering threat" which had to be confronted. Instead the ISG found Saddam represented a diminishing threat.

However, Charles Duelfer, the head of the ISG and the report's chief author, said that by late 2001, when the international embargo on Iraq was tightened, it was clear sanctions would not have contained Saddam for much longer.

Mr Duelfer told a Senate committee yesterday the Saddam regime "had made progress in eroding sanctions, and had it not been for September 11, things would have taken a very different turn for the regime". He pointed out the report was comprehensive but "not final" as a team of 900 linguists were still sifting through a mountain of documents.

But Mr Duelfer, a former UN weapons inspector, added: "I still do not expect that militarily significant WMD stocks are hidden in Iraq."

Tony Blair said that the report showed Saddam was seeking to develop weapons of mass destruction and had retained key scientists to do so.

Mr Blair said in Ethiopia that the report showed that "the situation is far more complicated than many thought. Just as I have had to accept that the evidence now shows that there were not stockpiles of actual weapons ready to deploy, I hope others will have the honesty to accept that the report also shows that sanctions were not working. On the contrary Saddam was doing his best to get round those sanctions".

Iraq had pesticide plants and other chemical facilities which could have been converted to the production of chemical weapons, the ISG found, but there was no clear evidence of such plans.

Meanwhile, Saddam appears to have lost interest altogether in biological weapons. "ISG found no direct evidence that Iraq, after 1996, had plans for a new BW [biological warfare] programme or was conducting BW-specific work for military purposes," the report concluded, adding that "there appears to be a complete absence of discussion or even interest in BW at the presidential level".

Iraq would therefore "have faced great difficulty in re-establishing an effective BW agent production capability".

As far as making a nuclear bomb was concerned, Mr Duelfer said Saddam "was further away in 2003 than he was in 1991. So the nuclear programme was decaying steadily".

Mr Duelfer's team did find evidence that Saddam wanted to restart his weapons programmes if the United Nations embargo on his country was lifted. However, none of that evidence was on paper. The primary source was the imprisoned dictator himself.

According to Mr Duelfer, Saddam saw WMD primarily as a counterbalance to Iran's programmes. The ousted dictator reportedly told his interrogators "he would do whatever it took to offset the Iranian threat, making it clear he was referring to Iran's nuclear capability", Mr Duelfer said.

He suggested that only the ousted leader knew what his weapons plans were and that even close aides were uncertain whether Iraq had WMD or not.

The Duelfer report found that there had been no "identifiable group of WMD policy makers or planners separate from Saddam.

"Instead, his lieutenants understood WMD revival was his goal from their long association with Saddam and his infrequent but firm, verbal comments and directions to them."

In the 12 years between the first and second Gulf wars, however, an American official who helped compile the report said, it was clear that UN sanctions had been effective in persuading Saddam to disarm.

Mr Duelfer said Saddam's "prime objective was the termination of UN sanctions on Iraq. And he weighed all policy actions and steps for their impact on this overarching objective".

Saddam apparently believed WMD had stopped the US marching on Baghdad in 1991 and had prevented defeat by Iran.

A separate CIA report, leaked to the US press this week, severely weakened the Bush claim of a link between Baghdad and al-Qaida. It found no clear evidence of Iraq harbouring Abu Musab al-Zarqawi, a Jordanian terrorist believed to be behind many of the attacks and now holding the British hostage, Kenneth Bigley.

In all, 1,625 US and UN inspectors were working in Iraq for two years - from November 2002 to September 2004 - at a cost of over $1bn. They searched nearly 1,700 sites.