A former employe of Britain's top secret communications spy agency has alleged in an unpublished manuscript that lax security was so pervasive during his 30 years there that both U.S. and British intelligence secrets routinely were lost, misplaced or fell into Soviet hands.

The employe, Jock Kane, 61, retired from the Government Communications Headquarters, or GCHQ, in 1978 after holding overseas posts supervising some of Britain's electronic eavesdropping activities in places such as Aden (now South Yemen) and Hong Kong, where Britain has maintained a 600-person base to listen in on Chinese military communications, missile and nuclear weapons tests. He also held supervisory posts at GCHQ's main facility at Cheltenham, England.

Kane's manuscript has been suppressed under Britain's Official Secrets Act. A copy has been obtained by The Washington Post.

Copies of the manuscript were seized last year from a British publishing house and from three British newspapers that were considering serializing its contents. In an unusual twist, Special Branch agents of Scotland Yard traveled to New York to retrieve an errant copy that had been submitted to a New York publishing house.

Many of Kane's criticisms involve mostly routine security matters, such as photocopying restrictions in top-secret areas and inventory control over U.S. and British military code books and encryption equipment. But Kane's principal allegation is that widespread negligence in GCHQ created conditions in which confessed Soviet spy Geoffrey A. Prime, with little difficulty, spirited out thousands of pages of top-secret GCHQ material relating to the most sensitive spy satellite projects undertaken by the United States and Britain during the 1970s.

Prime, a GCHQ Russian linguist, confessed his espionage activity after he was arrested in July 1982 for child molestation after leaving the agency. He was convicted in November 1982 and sentenced to 35 years in prison. U.S. intelligence officials have said Prime did serious damage to the security of the U.S. spy satellite program.

Some of Kane's allegations have been aired in British television documentaries and others have been published in the United States. Still, when Kane completed the manuscript for publication in book form, the government took formal action to stop it.

The reason, said Henry Steel, legal secretary to Britain's attorney general, in a telephone interview last week, was, "This is an account given by him of information that by its nature is confidential and represents a breach of his duty of confidence to the Crown."

But Kane and his supporters have questioned the government's harsh reaction. "I think the British government is probably suppressing the book more out of embarrassment than security concerns," said James Bamford, American author of "Puzzle Palace," a history of the U.S. National Security Agency (NSA).

GCHQ is the British equivalent of NSA, whose job is to monitor and intercept radio, telephone and cable traffic overseas, culling useful intelligence for western military and political leaders. GCHQ, like NSA, uses satellites and sophisticated earth-based antennae to scoop up Soviet and other foreign communications for analysis. The agencies control the largest supercomputers on earth to sort and decipher military codes also intercepted by vigilant monitoring of the airwaves.

It was this kind of intelligence capability that allowed the U.S. military earlier this month to track the movements of Palestinian hijackers of the Italian cruise ship Achille Lauro and to intercept Egyptian communications in a manner that gave U.S. officials a precise understanding of every step taken during the crisis.

One revelation in the manuscript is that Prime compromised a sensitive detection system used to locate Soviet ballistic missile submarines when they surface to communicate with their bases. The project, code-named Sambo, according to Kane, was instituted during the 1970s when the Soviets went to "burst," or compressed radio transmissions, to avoid detection of their submarine communications.

Says Kane in the manuscript, "Geoffrey Prime was apprised of GCHQ's successes against this system in 1976, and again notified his Kremlin masters, thus jeopardizing the entire defense system of Great Britain and the U.S.A." Kane states that Prime's punishment for compromising this aspect of British intelligence was 14 years of his 35-year prison sentence.

Kane described GCHQ as having a staff of 11,000 and an annual budget of more than $700 million, greater than the combined budgets of MI5 and MI6, the better known British intelligence services. "I was one of a select few in GCHQ and NSA skilled in activity so sensitive it was classified MOST Secret," Kane states in the book.

Reached by telephone in England, Kane said he and Britain's National Council for Civil Liberties were raising money to challenge the injunction. "I cannot discuss anything in the manuscript or I will be up for contempt of court."

Kane alleged in the manuscript that due to intelligence sharing between the United States and Great Britain, much of the highly classified codes and other encryption material that were lost or compromised by poor security at GCHQ posts may have exposed U.S. intelligence activities and, during the period of the Vietnam War, may have caused the death of American soldiers who planned operations with the aid of intelligence gathered by the British in Hong Kong.

In the manuscript, Kane is careful to say that he did not produce the work to expose any of Britain's national secrets that were not already exposed by Prime.

Rather, Kane insists, the manuscript is designed to call attention to the history of poor security measures that have turned GCHQ into a "negative asset" among western intelligence agencies.