British Prime Minister Tony Blair, who was on a plane between the United States and Japan, was informed of the development, which could lead to a major crisis for his administration.

"They found the body of a male on Harrowdown Hill," five miles from Kelly's home in Abingdon, a police spokeswoman said. The identity of the body was not yet determined.

Police officers were guarding the entrance to a single track road leading to the site where the body was found, which is crowned with a wooded copse and sits in the rolling English countryside.

Kelly, 59, has been named as the possible source behind a BBC report which alleged the British government had "sexed up" its dossier on Baghdad's arms capabilities ahead of the war on Iraq.

Kelly disappeared on Thursday afternoon, two days after facing a grilling by a parliamentary committee investigating the affair.

His appearance before the committee had prompted an angry reaction from MPs sitting on it, who claimed that he had been "set up" by the defence ministry.

Kelly, who specialises in microbiology, admitted he had met Gilligan a week before he broadcast his story but he said he did not think he could have been the source for the story, which became the subject of a bitter row between the government, the BBC and critics of the war on Iraq.

Kelly had alluded during questioning by the foreign affairs select committee to the intense pressure he was under amid the fierce media interest in the affair.

"We are obviously very concerned about the welfare of Dr Kelly and hope that he returns safely," a Downing Street spokesman said after learning of the expert's disappearance. Kelly left his house on Thursday telling his wife he was going for a walk, and never came back.

The identity of the body found on Friday would not be determined for a couple of hours, Thames Valley police spokeswoman Victoria Bartlett told AFP Friday morning.

Opposition Conservative MP Richard Ottaway who was on the committee said it would be a "tragedy of ghastly proportions" if "political machinations" had resulted in Kelly's death.

"The political ramifications, if the body is Dr Kelly ... are serious. People are beginning to get edgy about the government and losing their faith in it. People don't trust it any more," Ottoway said.

"And now that political machinations have actually, or could have, resulted in the death of a potentially important person in this whole thing, I don't think will help the government one iota," he said.

In his report in May, BBC's Andrew Gilligan claimed Campbell, the government's director of communications and a key aide to Blair, had ordered that the claim that Iraq could deploy chemical or biological weapons in as little as 45 minutes, be inserted into a government dossier released in September.

The report sparked a furious row with the government, prompting the official parliamentary inquiry into the intelligence that was presented by Downing Street as a justification for joining the US-led war on Iraq in March.

Sky News's respected political editor Adam Boulton, who was on the plane with Blair between Washington and Tokyo, said that if the body was Kelly it would lead to "a full-scale government crisis."

He speculated that the events could lead to Campbell's resignation, as well as an independent judicial inquiry.

WAR.WIRE