Britain's reputation in physics and astronomy has been harmed by a government funding body's handling of a £80 million hole in its budget, an official review concluded yesterday.

Decisions made by the Science and Technology Facilities Council (STFC) to resolve the shortfall have led to “significant damage” to Britain's standing, according to the expert panel commissioned by the Government.

The findings of the inquiry, chaired by Professor Bill Wakeham, will place further pressure on the STFC's chief executive, Professor Keith Mason, who has been criticised strongly by MPs for his handling of the crisis.

A report from the Commons Innovation, Universities, Science and Skills Committee in April stopped just short of calling for his resignation, saying that he had “compounded the problem with ineffective and secretive management”.

The Wakeham review was ordered by ministers in December after an outcry among scientists at the STFC's budget problems, which have forced Britain to pull out of international collaborations and to stop supporting several areas of physics. The necessary cuts also threatened the survival of Jodrell Bank Observatory in Cheshire, though its medium-term future has now been secured.

Though the Wakeham inquiry had been asked to investigate the health of British physics in general, it said that it was very concerned about aspects of the STFC budget crisis.

“The panel believes that significant damage has been done to the UK's international reputation in some areas of the discipline of physics following the furore that was generated by the manner, timescale of changes and announcement of recent STFC funding decisions,” the review said.

That echoed the MPs' report, which said that pulling out of projects such as the International Linear Collider, a next-generation atom-smasher that would succeed the Large Hadron Collider, had made Britain appear to be an “unreliable and incompetent” international partner.

Professor Wakeham, Vice-Chancellor of the University of Southampton, was also critical of the structure of the STFC's ruling council. Many scientists had complained that fields that were not represented on it had been selected for cuts.

However, the review found that British physics was broadly healthy. Britain has an exceptional record of producing research papers that are frequently cited by other scientists.

The review expressed concern at the falling number of A-level entries in physics, which were down 13 per cent between 2002 and last year, from 31,543 to 27,446. The numbers of women taking it fell by 16 per cent.

The STFC declined to comment on the criticism.

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