Gurkhas may be scrapped over fears that veterans will cost too much

Under new rules that are due to be announced by Home Secretary Jacqui Smith in the next few weeks, the rights of former Gurkhas who left the regiment before 1997 are expected to be widened significantly.

The change follows a High Court decision last year which granted five of the Nepalese veterans the right to stay in Britain in a test case victory which led ministers to pledge a review of the rules covering up to 2,000 ex-Gurkhas in the same situation.

Campaigners, whose supporters include Joanna Lumley, believe that full residence rights should now be given to all Gurkhas - who under the existing regulations are only entitled to move to Britain if they served after 1997.

Military officials are concerned, however, that the introduction of blanket residence rights for the veterans and their dependants could leave the Ministry of Defence and British taxpayers with a substantial bill of between £1billion and £3 billion.

One key reason is that any Gurkhas who move to Britain will be entitled to full pensions, unlike the current system when those resident in Nepal receive only about a third of the amount of former servicemen living in the UK.

Additional costs could also be faced by the NHS and other parts of government, but the impact on the defence budget remains a concern.

"This could make the Gurkhas too expensive for the Army," said a senior defence official. "We all acknowledge the fantastic service the Gurkhas give, particularly now in Afghanistan, but they may be too costly. Least of all do we want to decry Ms Lumley's campaign which has shown the public what we owe the Gurkhas."

Insiders warn, however, that if full rights are granted the Gurkhas could become the most expensive infantry regiment in the Army. By some calculations up to 50,000 veterans, relations and dependants could apply to come to the UK from Nepal and other parts of Asia. There are currently 3,500 Gurkhas in the Army.

Under a deal between Britain, Nepal and India in 1947, Nepalese soldiers serving in the British Army's Brigade of Gurkhas were to serve for 12 years and then return home to the Himalayas with a bounty and a pension. It ruled out rights to British citizenship.

More a gentleman's agreement than a binding legal document, it was this deal that Mr Justice Blake ruled unlawful and against the human rights of Gurkhas who had served the British Crown. This has led to the new guidelines being introduced.

'Better to die than be a coward'

During the war with Nepal in 1814, the British were so impressed by the bravery of the Gurkhas that, after signing a peace agreement, they asked the fearless soldiers to join their ranks.

Following the partition of India in 1947, Britain agreed with Nepal and India to transfer four Gurkha regiments to the British Army. Since then, the warriors, whose motto is "Better to die than be a coward", have fought for the British all over the world, receiving 13 Victoria Crosses. They were instrumental in preventing a Japanese invasion of India in the battle of Imphal in July 1944, turning the tide of the Second World War in Asia. More recently they have served in Afghanistan and Iraq.