Hundreds of survivors of one of the worst medical disasters in the history of the NHS are demanding millions of pounds of compensation from the government to alleviate the acute poverty in which many of them are now living.

Haemophiliacs and other patients who were infected with HIV and hepatitis by contaminated blood have presented a detailed case to the Department of Health for one-off payments of up to £750,000 each and a rise in monthly allowances they are already being paid.

They say initial compensation paid in the early Nineties, ranging from £21,000 to £80,000, was calculated on the assumption - widely held by doctors then - that they were facing imminent death.

Their request comes amid growing accusations of a massive cover-up after officials admitted that hundreds of crucial documents about their case had been destroyed by a civil servant. This issue is due to be discussed in the House of Lords on Wednesday when there will be calls for a government statement to explain why the paperwork was shredded.

While the vast majority of those infected during the scandal in the late Seventies and early Eighties have died, around 380 haemophiliacs and 20 other patients given contaminated transfusions during surgery are still alive.

An investigation by The Observer has found that many are living in extreme poverty on state benefits and a trickle of cash from a trust fund.

All those infected were urged to accept the original settlement because fighting on through the courts for more would have taken years. They were required to sign away their right to take future legal action against the government.

Survivors and their supporters say this has left them in impossible hardship. They point to a recent case in which a man infected with a variant HIV virus from contaminated blood during surgery at the private Nuffield Hospital in Birmingham was awarded £750,000 after a seven-year court battle.

Lord Morris of Manchester, the campaigning former Labour MP who is president of the Haemophilia Society, said a grave injustice had been committed and he urged the government to act with 'decency and humanity' to alleviate the survivors' suffering.

'The lives of these people have been absolutely devastated by what is without doubt the worst treatment disaster in the history of the NHS,' he said.

'These people and their dependants urgently need more help. The money they have received so far goes nowhere near compensating them for the damage inflicted on them by the NHS.'

Martin Harvey, chief executive of the Macfarlane Trust charity, which assembled the funding request, said: 'No one expected, nearly 20 years on, that there would have been any survivors of this terrible error. However there are many living in acute poverty.

'The capital payments given to them in the early Nineties, which were in any case small, have long since been spent, often on the advice of consultants on the basis of their likely imminent deaths.'

Gary Kelly, 43, who was infected with HIV during treatment for leukaemia, said the mistake had left him struggling financially, physically and emotionally.

'The NHS cured me of cancer, which was wonderful, but in the process, they infected me with HIV. Since that day 20 years ago, I've been unable to work, form a relationship and have sometimes struggled to pay bills,' he said.

He was awarded £43,500 in 1992 but, having been told he had no more than five years to live, spent it on clearing his debts and taking a holiday.

Haydn Lewis, a haemophiliac, was infected with HIV and hepatitis C by the tainted blood and passed the HIV to his wife, Gaynor. In 17 years he has attended more than 150 funerals for fellow haemophiliacs given tainted blood.

'Money is important but much more than that I want an explanation,' he said. 'It is absolutely scandalous that the government refuses both to compensate victims or hold an inquiry into what happened. I want to be able to tell my sons and my wife who was responsible.'

Margaret Unwin, chief executive of the Haemophilia Society, said the patients had been treated 'disgracefully and with a lack of respect'.

'When the payments were initially made it was on the assumption that people would not live for long. Some still are alive, and they are living with unpleasant illnesses because of an NHS blunder. There has never been an apology and to add insult to injury these people are increasingly existing in hardship.' They needed a decent standard of living.

A spokeswoman for the Department of Health said the patients' request had been received and was being considered.