In an explosive book, Annie Machon, a former M15 officer and girlfriend of ex-spy David Shayler reveals the sinister side of the intelligence services, including plots to murder. She talks to Sarah Foster about Colonel Gaddafi, David Kelly - and Diana and Dodi.

'DAPHNE Green, my interviewer, was not at all what I had expected: a tall, slim, 30-something woman with hair down to her hips, and a layered hippy skirt. She told me that the service was looking for a new breed of officers with a more rounded view of the world. MI5 was no longer obsessed with 'reds under the bed'. Most of the work of MI5 in the 1990s - I was assured - would be in counter-terrorism. More importantly, the service had finally been put on a legal basis. This meant that for the first time, MI5 was formally accountable."

These claims, made at Annie Machon's first interview for MI5, were to remain with her; a chilling reminder, she says, of how she was misled. As was common practice, the intelligence service had made an approach to her in secret. A Cambridge graduate from Guernsey, her only prior experience of spies had been watching the John Le Carr drama, Tinker, Tailor, Soldier, Spy on television. After taking Foreign Office exams, she received a letter on MoD-headed notepaper reading: "There may be other jobs you would find more interesting". Intrigued, she rang the number provided and after a stringent selection process, embarked on an exciting new career as a junior officer. But it wasn't long before she realised that far from serving her country as she had hoped, she was being engaged in practices she found abhorrent.

"I was troubled most by an organisation which would not learn from its mistakes, which lied to government, seemed resistant to change, did not care about getting the best from its staff, and never considered ways of making better use of its resources in its fight to protect us," Annie writes in her book, Spies, Lies and Whistleblowers.

ONE of the early warning signs was her discovery that there was intelligence in the form of Personal Files, or PFs, on more than a million people, much of which she believed to be unwarranted intrusion. "On one occasion, for example, a schoolboy had written to the Communist Party asking for information for a topic he was preparing at school. His letter was copied and used to create a PF, where he was recorded as a 'communist sympathiser'", says Annie, 36. She was disturbed to learn that there were PFs on many high profile figures, including Arthur Scargill, Mohamed Al Fayed and Tony Blair.

As she struggled to do her job, battling against bureaucracy and alleged incompetence, she met David Shayler, a promising young officer from Middlesbrough, and started a relationship with him. It was through David that she learned of MI5's failure to act on intelligence that could have prevented two bombings in the North-East, in June 1993.

Sean McNulty, a suspected member of the Provisional IRA, had been caught on CCTV outside a house in Scotland, then the focus of the IRA's mainland terrorism campaign. But it was not until 12 days later - after McNulty had carried out bombings in North Shields and Wallsend - that the images found their way to MI5.

"The failure to pass on the photos cost the authorities dearly. It is highly foreseeable that taking 12 days to pass intelligence from the target address to London will inevitably allow the IRA to carry out attacks and avoid detection," says David, taking up the narrative.

TO make matters worse, when he included this in an official report, he claims it was taken out. "When I turned to my piece, I was horrified to find that the chronology of the McNulty case had been bowdlerised. The report gave the impression that the CCTV stills had been taken the day they arrived, not 12 days before," he says.

What finally prompted David and Annie to leave the service was David's claim to have learned that MI5's sister organisation, MI6, had funded a plot to assassinate Libyan leader Colonel Gaddafi. Although the alleged coup by members of al Qaida failed, David says he was appalled. "I joined the service to stop terrorism and prevent the deaths of innocent people, not to get involved in these despicable and cowardly acts."

Lacking an official channel through which to complain, David went to the media, starting a series of disclosures in the Mail on Sunday in August 1997. Fearing a backlash, he and Annie fled to Paris, where on the British government's orders, David was imprisoned. He later stood trial in the UK and was jailed for breaching the Official Secrets Act. A court injunction bans him from making further revelations about the alleged malpractice of the intelligence services.

Annie denies that either she or David have ever compromised national security. She says that rather than take his claims seriously, the Government has consistently refused to listen to David, branding him a fantasist and trying to discredit him in the media. She sees clear parallels between his treatment and that of Government scientist and Iraq weapons inspector Dr David Kelly. "Hutton decided to blame BBC management practice for the events leading up to Dr Kelly's apparent suicide. Many saw Hutton's report for the whitewash it was. In exactly the same manner as David's Law Lords hearing, Hutton didn't even look like he was trying to get at the truth. The findings of his inquiry have already had a chilling effect on free speech in Britain."

When asked if Dr Kelly could have been murdered, as has been speculated, Annie says: "I would say I thought that 80 per cent. It was just too convenient for the security services that he died."

IN the book, David suggests that Princess Diana and Dodi Al Fayed's deaths may also have been orchestrated. "Having looked at the available evidence, I am personally inclined to think that MI6 paid to have Diana and Dodi involved in an accident in the same way they paid to have Gaddafi assassinated. Because Diana was either getting married to Dodi or she was pregnant, the authorities planned the crash to ensure she was taken away from the Al Fayed family or that she lost her unborn child," he says.

Annie says that so far, the authorities' response to her expos has been a "deafening silence". She had hoped to have it published before the General Election, to highlight what she sees as Tony Blair's failings as a Prime Minister, but MI5 took 15 months to vet it. Now she just wants people to read it and make up their own minds about the truth. "I hope that people will read the book and read about these serious issues. I think it deserves a fair hearing," she says.

* Spies, Lies and Whistleblowers by Annie Machon (Book Guild Publishing) £17.95.