British veterans who fought a bitter and costly guerrilla war in Malaya 50 years ago are considering suing the Cabinet Office for "maladministration" to win the right to wear a medal awarded by a grateful Malaysian government in honour of their sacrifice.

Campaigners representing the eligible 35,000 former UK soldiers, sailors and airmen - including an estimated 5000 Scots - say a handful of unelected civil servants are denying them an honour they earned as teenagers in battles against Communist insurgents.

Despite a 1968 ruling by the Queen that orders, decorations and medals conferred on UK citizens by Commonwealth countries could be worn "without restriction", the Cabinet Office's seven-member Honours and Decorations Committee has spent much of the past two years obstructing the process.

The committee finally ruled in 2006 that eligible veterans, most now in their 70s, could receive the Pingat Jasa Malaysia(PJM) medals for the Malayan "emergency" but not wear them at Remembrance or other parades.

The conflict was never raised to the status of a "war" because that would have rendered void insurance on British-owned rubber plantations and railways, both prime targets of Chinese communist guerrillas.

But 519 British troops were killed, including 95 Scots, in more than 10 years of ambushes and patrol actions in some of the most inhospitable jungle, mountain and swamp on earth and thousands of others were wounded or fell sick.

The Malaysian government offered to supply the campaign medals at its own expense in 2005 to honour the Commonwealth troops who underwrote and defended its existence and sovereignty in the 1950s and 60s.

The governments of Australia, New Zealand and Fiji all accepted the offer and their Malaya veterans can now wear the PJM alongside their other decorations.

Denis Brennan, Cabinet Office secretary to the UK medals' committee, and the individual campaigners hold responsible for the problem, could not be contacted yesterday but a spokesman for the Foreign Office said: "Her Majesty's Government's rules preclude the wearing of foreign medals for events in the distant past or for events more than five years previously.

"Eligible veterans of the Malayan emergency should already have received the Malaya bar to be worn as a strip or clasp across the ribbon of their General Service Medals. This is an issue for the Cabinet Office."

Despite this, the government last year granted permission for the award and wearing of medals for the 1956 Suez campaign and allowed Russian medals to be pinned on British survivors of the 1940s Murmansk convoys.

Barry Fleming, a veteran who runs a website dedicated to the PJM campaign, said: "Our information is that a handful of civil servants made the decision not to allow the wearing of the medal and that neither government ministers nor the Queen were fully aware of their behind-the-scenes manipulation.

"The entire British honours system has been brought into disrepute by the way the PJM issue has been mishandled. It is an insult to veterans and to the government of Malaysia.

"We are taking advice on suing the Cabinet Office for maladministration. A number of MPs of all parties have also agreed to table questions and to attempt to have the issue aired by means of Early Day Motions in Parliament."

Brigadier Allan Alstead, a former commander of 51st Highland Brigade, spent two years fighting as a second-lieutenant in the campaign. He said: "Many thousands of Scots and other British troops gave up two years of their young lives as national servicemen in Malaya. They deserve better."

Britain's forgotten war
The Malayan Emergency was a full-blown guerrilla war waged by ethnic Chinese Communist guerrillas against British and Commonwealth forces for more than a decade in the 1950s and 1960s.

The insurgents operated in small raiding bands from jungle hideouts, striking against railways, rubber plantations and military bases.

They were drawn from the 30,000 to 40,000 Chinese who fought against Japanese occupation in the 1940s.

Britain committed almost 40,000 troops and Australia 13,000 at the height of the insurrection.

In the end, allied forces forced the guerrillas back, beating them at their own game.

The plan was also a model of winning hearts and minds of ethnic Chinese and Malay civilians, separating the insurgents from supplies and potential recruits.

Malaya cost Britain 519 dead, more than died in 30 years of fighting in Northern Ireland and three times as many as have died so far in Iraq. Yet it became a forgotten war, overshadowed by Vietnam.

It was also arguably the only counter-insurgency campaign won by any major power in the 20th century.