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LONDON (Reuters) - Britain's international reputation has been hit by allegations that its spies colluded in torture, but reforms to remedy the damage must preserve the secrecy that espionage needs, the government said on Wednesday.
Foreign Secretary William Hague said he hoped a strengthening of outside scrutiny and an inquiry into reported abuse would contribute to "drawing a line under the past" and repair Britons' trust in their intelligence services.
"As a nation we need to be an inspiring example of the values we hold dear and that we want to encourage others to take up," Hague said in a speech.
"Moral authority in the eyes of the world, once damaged, must be painfully and gradually re-established."
Hague, who oversees Britain's Secret Intelligence Service, (SIS), and the Government Communications Headquarters intercept agency, said secrecy was vital to spies' "dangerous work".
"Many agents and sources risk their lives, some lose their lives, to give us the vital information to keep us safe. We have a duty to protect them," he said.
Both SIS and GCHQ are trying to widen the avenues of recruitment for intelligence officers and deepen their range of sources, for example among Briton's ethnic minorities and in Muslim majority nations, tasks made more difficult by allegations of British complicity in abuse of detainees.
Hague said he saw hundreds of operational proposals a year and did not approve all of them, adding intelligence "throws up some of the most difficult ethical and legal questions".
Tough issues included "allegations of UK complicity in extraordinary rendition leading to torture. The very making of these allegations undermined Britain's standing in the world as a country that upholds international law and abhors torture".
British authorities say they would never use, or encourage others to use, torture to obtain information.
An independent inquiry announced by Prime Minister David Cameron in July last year will examine allegations made by several Britons of Pakistani descent that they were abused in custody in Pakistan with the complicity of British officials.
It will also look at allegations of mistreatment of those held at the U.S. prison at Guantanamo Bay, Cuba, and probe allegations that British security services were involved in illegally sending Libyan terror suspects to Muammar Gaddafi's Libya where, the individuals allege, they were tortured.
One of the complainants is prominent Libyan Islamist commander Abdel Hakim Belhadj, now seen by some analysts as a significant political player in post-Gaddafi Libya.
Several human rights groups say they will not take part in the investigation as they believe it risks becoming a "whitewash".
Hague also plans to close a legal loophole that allowed a UK court last year to order the release of U.S. intelligence material. The move is designed to reassure foreign allies that secrets shared with Britain will remain undisclosed.
The government also plans to convert a committee of MPs which monitors the agencies into a statutory committee that reports to parliament and has more power to obtain information. At present the committee reports to the prime minister.
"Key overseas relations have been strained by pressure to disclose sensitive information belonging to other governments," Hague said. "All these difficult issues have contributed to a lack of public trust and damaged our relations overseas."
Reporting by William Maclean; Editing by Jon Hemming