SCOTTISH haemophiliacs infected with the Hepatitis C blood virus after NHS treatment have been caught up in a legal wrangle which has thwarted their attempts to win compensation.

The dispute is between their lawyers and the Scottish Legal Aid Board, with the solicitors claiming the ''obstructive'' mechanism of gaining legal aid for groups in Scotland is to blame.

Full legal aid has been granted to those affected in England, enabling the first test cases to begin in London next month.

But as many as 40 Scots are still at the first stage of putting their cases together, some nine years after the cause of their illness was diagnosed.

In total, 317 people in Scotland with haemophilia contracted the hepatitis C virus after NHS staff treated them with contaminated Factor Eight clotting agent in the 1970s and 1980s, according to figures from the Scottish Needs Assessment Programme.

Lawyer Dominic Harrison who, until recently, was heading the Scottish Solicitors Hepatitis Group, on behalf of clients, yesterday branded the mechanism for legal aid claimants in Scotland ''unworkable''.

He said: ''Unlike the English system, Scottish legal aid restricts funding to each claimant so that their respective solicitors would have to carry the weighty expense of the investigations and then try and claim the costs back at a later date.

''This is just not workable and, as such, solicitors have found they are unable to progress matters on clients' behalf.''

He added: ''It is not that the Scottish Legal Aid Board is deliberately trying to be difficult, it just seems that the English system - where a budget is drawn up for lawyers to start investigations - allows the cases to progress.

''I suspect it would be better for the matter to be taken into political hands so that a compensation package could be put together, rather than the victims being dragged through a legal process which has taken years, yet with no clear way forward.''

An Edinburgh woman whose son has the blood disease said: ''We have been waiting for years for this to be resolved and it is depressing to hear we may be back to square one.''

Solicitor Tony Mallen, a senior partner in the Newcastle legal firm representing English sufferers of Hepatitis C, said: ''The Scottish Legal Board does not seem to be providing adequate resources up front for the investigation of these complex group cases, and where you are challenging a Government body with unlimited funds, it is even more important.

''It is the one part of the much admired Scottish legal system that is not envied in England or Wales.''

Mr Philip Dolan, vice-chairman of the Haemophilia Society, called the situation a complete injustice which appeared to be ''discriminatory'' against those living in Scotland.

However, Mr Tom Murray, director of legal services for the Scottish Legal Aid Board, said: ''I reject the idea that our method of gaining legal aid for group action does not work.

''The mechanism has been successful in the past. This particular action has not reached the point where we can give a decision on whether it receives aid or not, as we do not have enough information from the group's solicitors to do so.''