George Galloway won a massive £150,000 in libel damages from The Daily Telegraph today over "seriously defamatory" allegations in a series of reports last year that he was in the pay of the Iraqi dictator Saddam Hussein.

The 50-year-old MP for Glasgow Kelvin described the High Court ruling as a "murderous caning" for the Telegraph - which faces legal costs of around £1.25 million - but said that it was equally a defeat for Tony Blair and all those who led Britain into the war in Iraq.

Surrounded by cheering supporters outside the court, Mr Galloway said: "The Telegraph, under its previous owners - Lord Black, Barbara Amiel, Charles Moore - were among the main trumpeters, the main buglers, for the disastrous decision to take this country into a wholly unnecessary war in Iraq.

"They sought to portray me as an enemy of the state and to portray the anti-war movement as the enemy within, but in fact the real enemy of our state are those political leaders responsible for these disastrous decisions."

Mr Galloway's libel action was brought after a series of reports and editorials published in April 2003 after the discovery of documents in the ruins of the Iraqi Foreign Ministry in Baghdad by a Telegraph journalist, David Blair.

The reports claimed that the MP made secret profits from Saddam Hussein and his regime, allegations that Mr Galloway denied.

The Telegraph Group defended the case - closely watched by editors and libel lawyers - on grounds that it had produced responsible journalism and in the public interest for it to publish the contents of documents on which the story was based.

During the four-day trial last month, James Price, QC, the Telegraph's counsel, said that the newspaper had published in the public interest "unquestionably one of the most important stories of a most important time".

The newspaper also presented it as a test for press freedom and used the so-called Reynolds defence - named after a case brought by Albert Reynolds, the former Irish prime minister against The Sunday Times in the 1990s.

That defence relies on journalists having a "qualified privilege", meaning that in certain circumstances they can report allegations of a serious nature without having to prove that they are true.

But Mr Justice Eady, sitting in the High Court without a jury, rejected that defence and ruled that Mr Galloway had not been given a proper chance to react to the "seriously defamatory" allegations - and especially the suggestion that he had profited personally from Saddam's regime - before publication.

The judge also rejected the Telegraph's arguments that it had remained neutral in its coverage. "They did not merely adopt the allegations. They embraced them with relish and fervour. Then they went on to embellish them..."

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