Thousands of war veterans will lose the right to claim additional money for Gulf war syndrome because the Ministry of Defence has decided to ignore a landmark decision which ordered it to recognise the condition, the Guardian has learned.

The action has provoked a row between the judiciary and the M0D with the president of the commission which made the ruling accusing the ministry of illegally "tampering" with the process to avoid recognising the syndrome.

Lawyers acting for Gulf war veterans say the effect will be to save the MoD millions of pounds and prevent between 2,000 and 6,000 disabled ex-servicemen receiving a supplement to their small pensions, as well as calling into question payments already being paid.

According to Mr Vijay Mehan, a lawyer who has represented war veterans: "Huge numbers of veterans will lose out in being able to claim a pension as a result of this move and it could also call into question pensions already being paid under Gulf war syndrome."

The ruling on Gulf war syndrome was made by the pensions appeal tribunal in November last year. It was seen as a landmark as it was the first time in 15 years that the ministry was forced to acknowledge the existence of the condition. The ministry chose not to appeal against the decision to the House of Lords.

The president of the pensions tribunal, Harcourt Concannon, has now discovered that the MoD has ignored his ruling by changing the terms of the award to one of the men involved in the test case, Mark McGreevy.

Mr McGreevy is suffering from a crumbling spine which, he claims, was caused by Gulf war syndrome. Since last year's ruling, the MoD has concluded that his illness has nothing to do with the condition.

Last month, Mr Concannon wrote to Alan Burnham, chief executive of the Veterans Agency, in unusually strong language. He said: "The Ministry of Defence have clearly and deliberately departed from the terms of the tribunal decision in order to substitute their own expression. In my view the Ministry of Defence have no legal authority to tamper with the terms on which a tribunal allows an appeal. The Ministry of Defence have taken on themselves to manipulate the terms of the tribunal's decision.

"What they have done is a purely unilateral decision. It is a decision that at least questions and probably undermines any confidence the tribunal might have that its decisions will be faithfully implemented."

Labour's former minister for the disabled, Lord Morris, told the Guardian: "The Ministry of Defence has effectively overturned the tribunal's decision. This could affect hundreds, if not thousands of servicemen who are suffering from Gulf war syndrome. This could stop them getting additional money."

Last Thursday, the National Gulf Veterans and Families Association wrote to Lord Craig of Radley, the former Air Chief Marshall at the time of the first Gulf War, to highlight the MoD's change of heart. The association accused the MoD of playing "another sleight of hand".

Last night the MoD said it would not accept the existence of Gulf war syndrome. The ministry said money was already being paid to ex-servicemen with disabilities, and that it did not need to pay extra money for those who claimed they were suffering from Gulf war syndrome.

In an unreported exchange in the Lords last week, Lord Drayson, the government's defence spokesman in the Lords, was challenged about the change to the McGreevy decision. At first he said the MoD had not overturned it, but then added: " The government cannot accept that Gulf war veterans should receive an additional payment because of the particular condition of Gulf war syndrome. It is not a question of geography or the cause; it is a question of the level of disability." Lord Drayson said it was not practical for the government to implement last year's ruling because that would involve writing to 53,000 former soldiers to ask them whether they were suffering from Gulf war syndrome.

He told peers: "We have looked at the potential of writing to the 53,000 veterans from the conflict and do not regard that as appropriate. It is not possible for us to differentiate between those for whom the specific issue of Gulf war syndrome is relevant. We are doing everything that we can to make sure that people are informed via the use of the internet and veterans' agencies."

Yesterday the Veterans Agency declined to comment on the letter sent to their chief executive accusing them of acting illegally. They said the decision to change Mr McCreevy's award had been a policy decision by the Ministry of Defence.