The veterans fear the synthetic compound, traced in former soldiers by American scientists, was given on the orders of defence chiefs to stimulate their immune system to fight off possible chemical and biological attacks.
But instead it may have wreaked havoc with their immune systems, leaving them suffering from the debilitating conditions they are now reporting.
Tests done in American laboratories found the compound squalene to be as prevalent in the blood of sick Gulf veterans as it is among patients involved in HIV-related experiments, where the compound is part of their medication.
Tony Flint, of the National Gulf Veterans and Families Association, said: "Presumably it was intended to boost the immune system but because we had so many drugs pumped into us all at once it seems to have done the complete opposite and broken it all down."
He said he was anxious for British veterans to be subjected to similar blood tests as the Americans.
Before the start of the war, Gulf troops were given a series of vaccinations to protect them from yellow fever, tetanus, typhoid, cholera, hepatitis B, hepatitis A, rabies, anthrax and bubonic plague.
Some soldiers say they received up to 18 injections.
Veterans claim that they still have not been told the contents of all the vaccinations they were given.
They have now written to John Reid, the armed forces minister, to ask whether any personnel were administered squalene.
In its synthetic form, squalene is used as an adjuvant, stimulating the body's immune system when mixed with other vaccines, in order to make those vaccines more effective.
It is not approved for use on humans except in the most experimental official tests designed to find cures for viruses such as HIV or herpes.
One senior American government official told the Washington Times magazine this month: "I can't tell you why [squalene] is there, but there it is. And I can tell you this too, the sicker the individual the higher the level of antibodies for this stuff."
One of the researchers involved in the tests told the magazine: "We found soldiers who never left the United States but who got shots who are sick, and they have squalene in their systems.
"We found people who served overseas in various parts of the desert that are sick who have squalene and we found people who served in the desert but were civilians who never got these shots who are not sick and who do not have squalene."
Pamela Asa, a Tennessee-based immunologist who specialises in auto-immune diseases, has found that some adjuvants can have the side-effect of imbalancing the body's immune system.
She has carried out tests on more than 150 sick veterans, 95 per cent of whom showed positive for synthetic squalene anti-bodies, which were not present in members of the public.
"Why they have squalene when they are not supposed to have been given it I cannot say," she said. "They need some explanation."
The US Defense Department has now admitted that it has squalene in its experimental arsenal, but has denied that it was used in the Gulf.
The vaccine used in HIV experiments consists of HIV envelope - a genetically engineered piece of HIV DNA - along with an adjuvant of squalene and a non-ionic detergent.
In separate tests on Gulf veterans, Garth and Nancy Nicolson, California- based immunologists, have found traces of the HIV envelope.
The envelope does not place the veterans at risk of contracting Aids.
Gulf troops were also exposed to organophosphate pesticide sprays used in an attempt to protect them from desert pests. There are also disputed claims that some soldiers came into contact with chemical weapons, possibly after Allied bombing of Iraqi munitions dumps.
This month Paul Carr, 30, who had been a prominent campaigner on Gulf illness, became the 134th known British veteran to have died since the conflict.