Anger erupted at Holyrood after it emerged UK ministers had waited eight months to inform the environmental watchdog, the Scottish Environment Protection Agency (Sepa), about the incident.
In a rare show of unity, the SNP and Scottish Labour condemned what was described as a cover-up. Labour said the UK Government had treated people with contempt.
The Scottish Government was briefed about the 2012 incident at the Caithness facility yesterday only hours before Defence Secretary Philip Hammond gave a statement to MPs. It tests the same reactors carried by the UK's fleet of nuclear submarines.
SNP defence spokesman Angus Robertson said: "The MoD knew how politically damaging this would be for the UK Government. This smells of a cover-up.
"There are now serious questions to answer. We can only wonder what other nuclear secrets the UK Government is keeping from the people of Scotland."
Glasgow North West Labour MP John Robertson told Mr Hammond: "The stupidity of this Government ... holds no bounds. You are holding the people of this country in contempt."
Mr Hammond insisted the incident posed no risk and was considered a "level 0" on the safety scale, requiring no need to notify authorities.
He said the UK Government informed Sepa, which is responsible for monitoring emissions around Dounreay, about the incident on a confidential basis.
UK Government sources also insisted there was no need to inform Scottish ministers because defence is a matter reserved to Westminster.
The leak emerged yesterday as Mr Hammond announced plans to spend £270 million on the Clyde-based Trident nuclear weapons system as a precaution in the wake of the incident.
Britain's oldest nuclear submarine, HMS Vanguard, will have its reactor refuelled at a cost of £120m. Ministers will then assess the situation to see if all the UK's submarines require work.
The internal leak involved a "miniscule" amount of radiation in a test reactor at Dounreay. The radiation entered the reactor's cooling water, but did not penetrate any further.
Mr Hammond also insisted there was no indication anything had gone wrong on board any of the submarines.
He said the test reactor had been "hammered" and put under intense pressure as part of experiments designed to anticipate what future faults it could develop.
A Ministry of Defence source said the test reactor was "best thought of as around 10 years further down the line than those on the boats".
While only one submarine will be refuelled initially, the entire fleet could need work.
Mr Hammond refused to rule out the possibility the UK could be left without a nuclear deterrent continuously at sea, which would be in breach of the Government's policy
He said: "I'm afraid this is scaremongering of the worst kind. I have told you, and all the scientific evidence supports the position I have taken, there are no safety issues at stake here."
He added: "'Level 0 events are not routinely made public, they are not routinely reported. That has been the practice of successive governments. That has been the practice across the civil and military nuclear sector."
The test reactor was shut down after the fault was detected. It was restarted in November 2012 and had continued to operate safely since, according to ministers,
It is due to be decommissioned in 2015, but this date could be brought forward if it allowed experts to discover more about the breach.
A Sepa spokesman confirmed it had not told Scottish Government ministers about the leak, despite their oversight role.
He said: "Following an increase of radioactive gases in the Vulcan reactor in 2012, the MoD requested that the issue be kept on a strict need to know basis for security reasons.
As the radioactive discharges were well below the authorised limits set for the site, and there was no environmental impact, Sepa did not inform the Scottish Government.
"Sepa has monitored for radioactive discharges at the Vulcan Naval Reactor since 1996 in order to assess the impact on the local environment.
"To date, Sepa is satisfied that discharges from the reactor have remained well below the authorised limit allowed under an agreement between the Ministry of Defence and Sepa. That limit is set at less than one millionth of the public dose limit."
He added that no impact on the local environment had been found, but monitoring would continue.