Opposition MPs say the report 'strikes at the heart of the Scottish judiciary' and that the allegations in it must be investigated immediately. The report includes the names of a High Court judge, two sheriffs and two other leading members of the legal system.
Looking into the handling of five legal cases, the report concludes that the authors felt that, in one case, the decision to drop charges and prosecution was 'a tactical one . . . to prevent the possibility of evidence being presented which could potentially compromise senior figures in the judiciary'.
One of the cases involved the withdrawal of 47 of 57 charges in a 'rent-boy' investigation shortly before the trial was due to begin. Another concerns an embezzlement surrounding Burnett Walker, a collapsed firm of solicitors, two partners of which were homosexual.
The leak has sparked the latest in a long line of homosexual-related scandals to hit Scottish legal circles since the resignation of Lord Dervaird, a respected High Court judge, in December 1989. Since then there have been rumours that some of the profession's leading lights have been professionally compromised by their homosexuality.
A conspiracy theory has developed which incorporates the suicide in 1988 of Ian Walker, senior partner in Burnett Walker. The leaked report says: 'The instance is one of a well-established circle of homosexual persons in Edinburgh with influence in the judiciary who may, or may not, have exerted that influence, but who have formed associations which in themself lay them open to blackmail.'
The report, prepared for Sir William Sutherland, Chief Constable of Lothian and Borders, was initiated after Tam Dalyell, Labour MP for Linlithgow, complained to Sir William about the handling of some cases.
Yesterday Mr Dalyell denied being the source of the leak. He has written to the Prime Minister asking for a full inquiry. Mr Dalyell, who was interviewed by police yesterday, said that without an inquiry people named in the report might suffer 'a slow trial by tabloid newspapers'.
Alistair Darling, Labour MP for Edinburgh Central, said a full inquiry should be held to put 'the rumours to rest'.
Lothian and Borders police said all allegations of criminal activity had been sent to the Procurator Fiscal. It was up to the Crown Office to decide whether to prosecute and the nature of charges.
The leak comes within weeks of the 'Fettesgate' break-in at police headquarters in Edinburgh. Police refuse to say whether there is any connection.