The spiralling cost of the Iraq war to the British taxpayer is set to exceed £1bn this year for the first time since the invasion.

The figures were released as MPs protested about the plight of Britain's NHS hospitals, ordered to cut costs to wipe out their £512m deficit by the end of this month. Many MPs said the money would be better spent on the service.

"This is the politics of Mad Hatter priorities," said Alan Simpson, a Labour opponent of the war. "The Government is throwing money into an unwinnable war zone in Iraq at the same time as withholding money that creates a war zone in our hospitals."

The total cost on the UK defence budget since the invasion exceeds £5.3bn but increases in defence spending have pushed up the cost by 10 per cent in the past four months. In November, the Ministry of Defence said it was expecting the cost of the Iraq military operations this financial year to be £860m - a fall of £98m on the previous year. But the latest spring estimates put the total at £1,002m, £142m more than expected four months earlier.

MPs on the Commons Select Committee on Defence have challenged the MoD to explain the rise, which has taken place after the Government announced it was reducing the number of troops in Iraq.

"Part of this increase is explained by the fact that the new operational bonus and indirect resource costs were not included in the earlier estimates," said the MPs on the committee. "If those elements are set aside, the MoD's forecast of the costs of this year's operations have risen by over 10 per cent for Iraq ... The cost of operations in Iraq is forecast to exceed last year's out-turn despite the reduced number of UK forces in that theatre and we call on the MoD to explain this."

The increases for the Iraq defence bill in the past few months includes a rise of £56m for military personnel and an extra £52m in equipment support costs and other costs. However, infrastructure costs have dropped £17m. In 2003, when the invasion took place, Britain spent £1.3bn on defence in Iraq but it fell back in 2004 to £910m.

Hans Blix, the former United Nations arms inspector, claimed yesterday that the invasion was "clearly illegal". Mr Blix said.

"There were question marks [over the evidence of WMD] but they changed them to exclamation marks," Mr Blix told Sky News. He accused America of a "witch-hunt" to justify the war.