The Foreign Office says that Edward Roberts, now 73 and living in Liverpool, was never held in a concentration camp.
But a German embassy official has disputed that ruling, saying that one of the camps had been classed as a concentration camp in the official Bonn gazette.
Mr Roberts was taken prisoner in July 1940. He spent five months at sea confined below decks on a German raider ship. He was eventually put ashore at Bordeaux before being transferred to Drancy, a camp north of Paris.
He was later moved on to Sandbostel, in Germany, which also held Russian and Polish prisoners, and eventually arrived at Milag Nord, a camp for captured merchant seamen. At Sandbostel, where the daily ration of one small loaf was shared between six men, he was forced to work in neighbouring fields with Russian and Polish prisoners. Mr Roberts said yesterday: 'The death rate was exceptionally high.'
His initial claim for compensation as a victim of Nazi persecution was rejected by the Foreign Office in 1964 because 'it was not illegal to inter members of the enemy's armed forces during the war'.
But his case has recently been revived by David Alton, the Liberal Democrat MP for Liverpool Mossley Hill, who challenged the Foreign Office view that neither Drancy nor Sandbostel had been concentration camps.
Mr Alton was told by Tristan Garel-Jones, Minister of State at the Foreign Office, in June: 'His claim for compensation as a victim of Nazi persecution was turned down in 1964 because none of the camps in which he was held were concentration camps.
'Nazi persecution was defined as illegal detention in a concentration camp or comparable place for the purpose of inflicting deliberate and organised suffering, torture or death in furtherance of Nazi ideology.'
In a further letter to Mr Alton last month, Alastair Goodlad, a Foreign Office Parliamentary Under-Secretary of State, said: 'We have conducted extensive research on the status of the camp at Drancy, consulting departments within the FCO, the Embassy in Paris, the Ministry of Defence and the Wiener Library in London (which specialises in the subject of the Holocaust).
'All concur that Drancy was not a recognised concentration camp during the Second World War, but an assembly/transit camp where prisoners were transferred to work and concentration camps.'
But the Wiener Library said yesterday that it did class Drancy as a concentration camp, and a German embassy official has written to Mr Alton: 'Drancy is in the list of concentration camps (KZ) published in the official gazette (Bundesgesetzblatt, year 1977, part 1, page 1786 follows, especially page 1799.)'
Mr Alton has now written back to Mr Goodlad, saying: 'How can we argue with that?'Reuse content