Supposed evidence linking Iraq to al-Qaida, used by the US as a justification for going to war, was invented by a prisoner in Egyptian custody to avoid harsh interrogation, according to government sources quoted today in the New York Times.
The article claims that Ibn al-Shaykh al-Libi provided his "most specific and elaborate accounts" about the ties only after he was handed to Egypt by the US in January 2002.
The anonymous government officials said a classified Defence Intelligence Agency (DIA) report issued in February 2002 casts doubt on the credibility of Mr Libi's information, as he was not being held in American custody when he made the statement and he may have been subjected to harsh treatment.
The DIA report "provides the first public evidence that bad intelligence on Iraq may have resulted partly from the administration's heavy reliance on third countries to carry out interrogations of al-Qaida members and others detained as part of US counter-terrorism efforts", according to the article.
Before the US went to war, President George Bush, Dick Cheney and the then secretary of state, Colin Powell, frequently cited Mr Libi's statement as "credible evidence" that Iraq was training al-Qaida members in terrorist techniques.
Mr Libi withdrew his statement after the US invaded Iraq and the CIA discredited intelligence based on his claims in 2004. US officials do not currently know the whereabouts of Mr Libi.
The CIA refused to comment on Mr Libi's case today, but a government official quoted by the paper said some intelligence provided by Mr Libi had been accurate and his claims that he had been harshly treated in Egypt had never been proved.
The case has further enflamed the row over the American use of rendition - transporting prisoners to another country to be interrogated, a policy banned by international convention.
The secretary of state, Condoleezza Rice, admitted earlier this week that the US does practise rendition but defended the policy by saying it had saved lives in Europe and the US.
Ms Rice has consistently said the US neither condones nor practises torture, but she has refused to confirm or deny the existence of CIA-run secret interrogation centres in eastern Europe that may be used to hold prisoners of the US.
Today, the US admitted for the first time that the Red Cross had not been given access to all its detainees.
The state department's top lawyer, John Bellinger, said the International Committee of the Red Cross (ICRC) had access to "absolutely everybody" at the US camp in Guantanamo Bay.
But when asked if the ICRC had access to all detainees held elsewhere in similar circumstances, he said "No" but declined to give further details.
Speaking to reporters in Geneva, Mr Bellinger reiterated Ms Rice's statement that the US did not practise torture.
"It is incorrect to suggest that the US is sending people off to places knowing that they will be tortured. We do not send people off to places knowing that they will be tortured or turn a blind eye to torture that may occur," he said.
The ICRC has demanded access to all foreign terror suspects held by the US in "undisclosed locations".
"The dialogue continues on the question. We would like to obtain information and access to them," said Florian Westphal, a spokesman for the ICRC.