Updated at 10:04 p.m.

Sen. John Walsh (D-Mont.) plagiarized a substantial portion of his final thesis at the United States Army War College, a news report Wednesday said -- a revelation that threatens to hamstring his underdog campaign for a full term in a key midterm battleground.

The news came five and a half months after Walsh was appointed to the Senate and in the midst of a competitive race against Rep. Steve Daines (R), who polls show is leading. It marked the latest instance of Walsh's military background coming under scrutiny, turning what he hoped to use as selling point in the campaign into a potentially serious vulnerability.

"Now we have two blows to his reputation in the military," said Montana State University political scientist David Parker. "And that's his strongest asset."

The New York Times first reported the evidence of plagiarism Wednesday afternoon.

The Times reported that nearly all of what Walsh recommends at the end of his paper, “The Case for Democracy as a Long Term National Strategy," comes from a Carnegie Endowment for International Peace document. Almost all of that material was republished verbatim, without the proper citations.

In addition, other parts of his thesis, submitted for a master's degree, were pulled from a paper written by a Harvard scholar in 1998.

Walsh is a former adjutant general of the Montana National Guard who has also served in Iraq. He earned his War College degree in 2007.

His military background has been the subject of contentious debate in the campaign. Earlier this year, Republicans attacked Walsh in a TV ad over an Army Inspector General's report that said he improperly solicited other National Guard leaders to join an association in which he was running for a leadership position.

Walsh's campaign responded with its own commercial, arguing that he was reprimanded for "defending Montana’s troops."

Walsh was appointed to the Senate by Gov. Steve Bullock (D) in February as a replacement for Democrat Max Baucus, who departed to become ambassador to China. Walsh was already a Senate candidate at that time; Baucus previously announced his intention to retire.

Before going to Congress, Walsh was Montana's lieutenant governor.

Walsh told the Associated Press that he was suffering from PTSD when he wrote his thesis and still takes antidepressants.

“I don’t want to blame my mistake on PTSD, but I do want to say it may have been a factor,” Walsh told the AP. “My head was not in a place very conducive to a classroom and an academic environment.”

Walsh's campaign insisted that he did not deliberately try to mislead anyone.  The campaign added that during the period Walsh wrote the paper, he experienced nightmares, anxiety and sleep problems following his return form Iraq in November, 2005.

Walsh started War College in July of 2006 and completed his paper in March, 2007. He completed his studies in June, 2007.

“This was unintentional and it was a mistake," Walsh campaign spokeswoman Lauren Passalacqua said in a statement. "There were areas that should have been cited differently but it was completely unintentional."

Parker, the political scientist, said the development has the potential to blunt Walsh's recent momentum. The Democrat had a productive second quarter fundraising period. And a recent poll showed him gaining ground on Daines.

"If you are a Democrat of national stature, do you want to go campaign with someone who has had this allegation leveled against them?" he asked.