Army compensation awards for hearing loss could cost up to £16 million a month, the equivalent of a new ship each month for the Naval Service, according to the Minister for Defence.

Mr Smith told the Dail the "avalanche" of claims was still continuing and there were 465 in the last four weeks.

If those applicants got the same compensation, including legal costs, as the current level of awards "you are talking about £16 million a month, which is a ship for the Naval Service every month of the year", he said.

The Minister said 80 civilian, legal and military personnel were working full-time on this issue at a cost to the State of £1.8 million a year.

He also told deputies that between 40 and 60 per cent of cases against the State would not be awarded significant damages if they were heard in other jurisdictions under internationally-accepted hearing criteria.

The Minister, replying to questions on Defence, told Mr Michael Bell (Lab, Louth) that settlements had been reached in 1,007 cases and court awards had been made in 28 cases. A further 29 had been successfully defended or withdrawn.

Compensation of £26.249 million and plaintiff costs of £4.492 million had been paid out in finalised cases. The average settlement was currently £22,000 but there was a wide range of awards, with the lowest at £4,000.

Mr Smith said that £85 million had been allocated for 1998 for personal injury claims and 90 per cent of it would deal with hearing impairment cases.

Replying to the Fine Gael spokeswoman, Ms Frances Fitzgerald, Mr Smith said the Government was prepared to compensate those "who have suffered a genuine injury and who are suffering a significant handicap".

"What it is not prepared to do is waste taxpayers' money on compensating individuals whose hearing is normal for their age or whose handicap is so small that they did not notice it until they spotted an advertisement in the paper inducing them to make a claim."

However, Mr Proinsias De Rossa, the Democratic Left leader, suggested the State was adopting the same approach that it had towards married women who sought compensation for loss of social welfare. That case eventually cost the State £260 million when it would have cost £18 million had it settled in the first instance.

The Minister told Mr Billy Timmins (FG, Wicklow) he would be disappointed if he did not get the report of the expert group examining a method of assessing hearing handicap by the end of January or early February at the latest.