British troops feel 'devalued, angry' and are 'suffering from Iraq fatigue', according to the head of the army, who warns that Britain's military covenant is under strain.

In a stark assessment of the morale of British troops, General Sir Richard Dannatt warns that the pressures of waging two simultaneous campaigns in Iraq and Afghanistan are 'mortgaging the goodwill of our people'.

Dannatt's comments are made in his Staff Briefing Team Report for 2007, leaked to the Sunday Telegraph, in which he warns that the 'military covenant is clearly out of kilter'.

The chief of the general staff writes: 'We must strive to give individuals and units ample recuperation time between operations, but I do not underestimate how difficult this will be to achieve whilst undermanned and with less robust establishments than I would like.'

Referring to overstretch, the report warns: 'The tank of goodwill now runs on vapour; many experienced staff are talking of leaving'.

Dannatt's remarks will make uncomfortable reading for a succession of defence secretaries who are held responsible for failing to secure good financial settlements for the armed forces. A spokesman for the Ministry of Defence said the report, which airs the grievances of soldiers, is designed to provide feedback for the military top brass.