NEW YORK (Reuters) - The United States gave Iraq vital battle-planning help during its war with Iran as part of a secret program under President Ronald Reagan ( news - web sites) even though U.S. intelligence agencies knew the Iraqis would unleash chemical weapons, The New York Times reported on its Web site on Saturday.

AP Photo Slideshow: Iraq and Saddam Hussein

The highly classified covert program involved more than 60 officers of the U.S. Defense Intelligence Agency who provided detailed information on Iranian military deployments, tactical planning for battles, plans for airstrikes and bomb-damage assessments for Iraq, the Times said.

The Times said it based its report on comments by senior U.S. military officers with direct knowledge of the program, most of whom agreed to speak on the condition of anonymity.

Iraq and neighboring Iran waged a vicious and costly war from September 1980 to August 1988, with estimates of 1 million people killed and millions more left as refugees.

U.S. intelligence officers never encouraged or condoned the use of chemical weapons by Iraqi President Saddam Hussein ( news - web sites)'s forces, but also never opposed such action because they considered Iraq to be struggling for its survival and feared that Iran would overrun the crucial oil-producing Gulf states, the Times reported.

It has been known for some time that the United States provided intelligence assistance to Iraq during the war in the form of satellite photography to help the Iraqis understand how Iranian forces were deployed. But the complete scope of the program had not been known until now, the Times said.

The Times noted that Iraq's deployment of chemical weapons during its war with Iran has been invoked by President Bush ( news - web sites) and Condoleezza Rice ( news - web sites), Bush's national security adviser, as justification for seeking "regime change" in Iraq.

'A CATASTROPHIC EFFECT'

"Having gone through the 440 days of the hostage crisis in Iran, the period when we were the Great Satan, if Iraq had gone down it would have had a catastrophic effect on Kuwait and Saudi Arabia, and the whole region might have gone down. That was the backdrop of the policy," the Times quoted an unidentified former Defense Intelligence Agency official as saying.

While senior officials of the Reagan administration publicly condemned Iraq's use of mustard gas, sarin, VX and other chemical weapons, Reagan, Vice President George Bush -- the father of the current U.S. president -- and senior national security aides never withdrew their support for the covert program, the Times quoted military officers as saying.

Current Secretary of State Colin Powell ( news - web sites), who at the time served as national security adviser, was among the Reagan administration officials who publicly condemned Iraq for its use of poison gas, especially one incident in March 1988.

The Times said that in early 1988, after the Iraqis, with U.S. planning assistance, retook a key peninsula in an attack that restored Iraqi access to the Gulf, defense intelligence officer Lt. Col. Rick Francona was dispatched to tour the battlefield with Iraqi officers.

Francona found that Iraq had used chemical weapons to secure its victory, observing zones marked off for chemical contamination and seeing unmistakable evidence that Iraqi soldiers had taken injections to guard against the effects of poison gas used against the Iranians, the Times said.

Powell, through a spokesman, called the Times account of the program "dead wrong," but declined to discuss it, the newspaper said. Both the Defense Intelligence Agency and retired Lt. Gen. Leonard Perroots, who supervised the program as the head of the agency, refused to comment, the Times said.

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