EVIDENCE has emerged of a plan by Osama Bin Laden to manufacture a "dirty bomb" that could spray nuclear material over highly populated areas.

British intelligence services are investigating claims by a Bulgarian businessman that he was approached earlier this year by a middleman for Bin Laden seeking to obtain highly radioactive material.

The pair discussed setting up an environmental company as a front to buy nuclear waste that could be combined with conventional explosives to create a "dirty bomb".

It is believed to be at least the fourth attempt by Bin Laden to obtain nuclear material. The Saudi terrorist has publicly vowed to gain weapons of mass destruction.

The latest approach was made in April after Ivan Ivanov, a Bulgarian businessman with long-standing ties to a Middle Eastern contracting firm, was invited to Pakistan.

On his arrival in Peshawar, Ivanov, a former Bulgarian intelligence officer, said it became clear his hosts were enthusiastic supporters of Bin Laden. They apparently saw his political links in eastern Europe as a "useful asset".

Speaking in a cafe on the outskirts of Sofia last week, Ivanov recalled how the men took him to see Bin Laden, who was speaking at a religious festival on April 10 on the outskirts of Peshawar.

At the time Bin Laden was wanted for his alleged involvement in the bombing in 1998 of two American embassies in Africa, in which more than 200 people had been killed. Yet Ivanov claimed uniformed Pakistani soldiers armed with M-16 machine guns had provided security.

A day later, Ivanov said he was taken on a rough mountainous bus ride along Pakistan's remote border with China. There he was led to a secret location, where he was introduced to Bin Laden as "our partner from Europe".

When Ivanov discreetly checked his Magellan 310 global positioning system, it showed the meeting had actually taken place in China. Western intelligence sources described the meeting near the Pakistani border as "credible".

Ivanov then travelled with his new business associates to a large villa in Rawalpindi. The next day he was approached by a Pakistani scientist who described himself as chemical engineer.

The scientist, who was highly educated and spoke almost fluent English, said he was interested in obtaining spent nuclear fuel rods from the Kozlodui nuclear electricity plant in Bulgaria.

"He wanted a legitimate way of buying nuclear waste from the power plant," said Ivanov. "He was ready to give me money in advance to find local companies to help him to export this material."

Ivanov was offered $200,000 (£137,000) to help set up an environmental firm to buy nuclear waste, and asked if he would run the company. He declined the offer and, on his return home, informed officials in Bulgaria of the meeting.

British authorities in Pakistan later discovered the 49-year-old scientist had been issued with two six-month visas to visit Britain in the last two years. They are now investigating his links with the Bin Laden network.

Although his trips to Britain remain a mystery, intelligence officials believe the scientist may have met sympathisers at British universities or tried to set up front companies similar to the one planned in Bulgaria.

Ivanov's account of the Bin Laden plot has been backed by Velizar Shalamanov, the former Bulgarian deputy defence minister, who last week said Ivanov had worked for the government.

A British diplomatic source in Pakistan said: "This appears to be a sophisticated plot using a scientist and a credible front company, and that is a concern."

Although British intelligence believes Bin Laden's Al-Qaeda network may have some crude chemical weapons such as cyanide, there is no evidence to suggest he has obtained any nuclear material.

In September 1998 Mamdouh Mahmud Salim, alleged to be a high-level aide to Bin Laden, was arrested in Germany after trying to buy low- grade nuclear reactor fuel.

Jamal al-Fadl, a former Bin Laden aide, told the FBI he had witnessed Al-Qaeda members trying to buy enriched uranium in the mid-1990s, according to court documents. He also claimed to have been to Sudan, where an associate of an army officer tried to sell him uranium for £1m.

Bin Laden has never made any secret of his interest in acquiring nuclear weapons. In an interview in January 1999, he said: "It would be a sin for Muslims not to try to possess the weapons that would prevent the infidels from inflicting harm on Muslims."