Gordon Brown was accused of strangling the inquiry into the Iraq war at birth yesterday by refusing to let it make public sensitive documents that shed light on the conflict.

The 'shock and awe' campaign in Iraq wreaked devastation. Getty images. A previously undisclosed agreement between Sir John Chilcot's inquiry and the Government gives Whitehall the final say on what information the investigation can release into the public domain. Mr Brown, who initially wanted the inquiry held in private, was forced to climb down earlier this year after an outcry and promised that most of its sessions would be heard in public. He said information would be withheld only when it would compromise national security.

However, a protocol agreed by the inquiry and the Government includes nine wide-ranging reasons under which Whitehall departments can refuse to publish documents disclosed to the investigation. Crucially, disputes between Sir John and the Government over disclosures would be resolved by the Cabinet Secretary, Sir Gus O'Donnell.

Critics warned that the catch-all exemptions on disclosure could spare the Government from a repeat of the embarrassment it suffered during the Hutton inquiry into the death of the weapons expert David Kelly, when a string of sensitive documents were disclosed.

The agreement allows the Government to stop publication of material which would "cause harm or damage to the public interest" such as national security, international relations or economic interests; breach the disclosure rules of the security services; endanger life or risk serious harm to an individual; breach legal professional privilege; prejudice legal proceedings or a statutory or criminal inquiry; breach the Regulation of Investigatory Powers Act or Data Protection Act; or be commercially sensitive.

It goes much wider than the reasons for preventing disclosure outlined by Mr Brown in the Commons in June. He said then: "I have asked the members of the committee to ensure that the final report will be able to disclose all but the most sensitive information - that is, all except that which is essential to our national security."

Last night Nick Clegg, the Liberal Democrat leader, likened the clampdown to an episode of Yes Minister, saying that senior civil servants had taken their revenge after the U-turn over private hearings. He appealed to Mr Brown to revise the rules, saying they made a mockery of his promise of a public inquiry.

Mr Clegg told The Independent: "This is tantamount to Whitehall putting a blindfold over the whole process. Chilcot and his colleagues have been completely rolled over and have allowed their hands to be bound before they have even started work. The Government will act as judge and jury on what will be disclosed. That is wholly unacceptable."

Lord Carlile of Berriew QC, the Government's independent reviewer of terrorism laws and a Liberal Democrat, said: "The protocol has the potential of turning a tiger into a mouse."

He said the reasons for withholding publication were so broad that "almost everything of interest" could be blocked.

Sources close to the Chilcot inquiry denied that it had been muzzled and said it was happy with the agreement with the Government. They insisted that the presumption was that information would be put in the public domain and that the protocol was designed to underline that. They said that they would "kick up a stink" if they felt documents were being withheld unreasonably. If the Cabinet Office blocked publication, the inquiry could announced that this had happened and why.

Inquiry sources stressed that the agreement would not stop its members having access to sensitive documents - only whether they could be published during the proceedings or in the final report.

Yesterday, the second day of the inquiry heard that Britain received intelligence days before invading Iraq that Saddam Hussein may not have been able to use chemical weapons. Foreign Office official Sir William Ehrman said that a report suggested that such weapons may have been "disassembled", while another report suggested Iraq might also lack warheads capable of spreading chemical agents.

Mr Clegg clashed with Gordon Brown over the rules on disclosing information during Prime Minister's Questions. Mr Clegg said: "It is vital that the Iraq inquiry, which started its work this week, is able to reveal the full truth about the decisions leading up to the invasion of Iraq."

The Liberal Democrat leader said the nine reasons why information could be suppressed "have nothing to do with national security and outrageously give Whitehall departments individual rights of veto".

He asked the Prime Minister: "Why did you not tell us about this before? And how on earth are we, and the whole country, going to hear about the whole truth about decisions leading up to the invasion of Iraq if the inquiry is being suffocated on day one by your Government's shameful culture of secrecy?"

Mr Brown referred to exemptions on grounds of damaging national security and international relations. He insisted that the inquiry team were happy with the way they were being asked to carry out their work, saying that Sir John had been "given the freedom to conduct an inquiry in the way he wants".

The Liberal Democrats said they would keep up the pressure on Mr Brown to tear up the agreement to allow more documents to be disclosed. They warned that, as currently drafted, the rules would be even more restrictive than the Freedom of Information Act, which forces the Government to state publicly why requests for disclosure are turned down. In contrast, decisions on the Iraq inquiry material would be taken behind closed doors, they said.