Blanket closures of paths during the foot-and-mouth crisis severely damaged the tourist industry.

In a damning report, the National Audit Office (NAO) has singled out the closure of rights of way in East Sussex.

They were shut at the start of last year's outbreak but did not reopen for many months - despite not a single case of the disease in the county.

The report says: "Counties such as Buckinghamshire, Lincolnshire and East Sussex, which were disease-free, were among those that kept their footpaths closed for the longest periods.

"The impact on rural tourism was huge, although this was not due solely to footpath closures. In some areas visitor numbers fell to nothing.

"The most severe impacts were probably on small accommodation providers, such as bed-and-breakfasts."

The report says a blanket closure policy should not be adopted in future outbreaks It says ministers at the Department for Environment, Food and Rural Affairs (Defra) have indicated the policy will be changed.

The report also paints a picture of over-charging and abuse by contractors called in at the height of the crisis, which led to the slaughter of six million animals and cost the Government £3 billion.

It states that, as the outbreak took hold, the policy of the Government was the best value for money would be obtained by stamping out the disease quickly. However, the study reveals crisis conditions quickly led to shortages of equipment and materials and prices began to rise.

Slaughterers could earn almost three-and-a-half times more in April 2001 than in February while fees levied by temporary vets increased by 50 per cent from February to March.

Price rises led to widespread disparities in costs across Britain. In Exeter, the average cost of cleaning and disinfecting one farm was £25,000 while in Worcester prices soared to £70,000.

Defra has now employed forensic accountants to examine the invoices of 107 of the largest contractors, 86 of which were paid more than £1 million for goods or services.

The team has completed work on ten cases. In five, a total £3.7 million has been shaved off the bill and in the remainder the Government remains in dispute.

The department is also withholding £70 million in disputed claims.

The NAO report also reveals how the Government ignored warnings, two years before the outbreak, to better prepare for an epidemic.

In 1999, Richmond Drummond, the northern region's head of veterinary services, warned the service could be overwhelmed by an outbreak, "particularly if a number of outbreaks occurred in separate locations at the same time".

Although the Government's emergency plans were in line with EU guidelines, the report called for stronger measures.

Sir John Bourn, NAO head, said: "In the light of what happened, urgent action is needed to produce contingency plans which would be more sensitive to outbreaks of different scales and thus be better suited to dealing with a future crisis on this scale."

Edward Leigh, chairman of the powerful Commons public accounts committee, said: "The agriculture department was completely unprepared for the epidemic which cost the rural economy and tourist industry so dear and the taxpayer over £3 billion.

"Their contingency plans showed a complete failure of imagination. In line with EU guidance, they did not envisage that ten farming premises could be infected at any one time."