London's Great Ormond Street Hospital today admitted selling children's body tissue removed during operations to a pharmaceutical company.

The revelation comes on the day that the report on the removal and retention of thousands of dead children's organs at Alder Hey hospital in Liverpool will be published.

It is expected to confirm that thousands of body parts may have been retained, many without consent, after operations.

Ministers and the entire medical profession are braced for a wave of public anger and revulsion in the wake of the Redfern Inquiry into the scandal at the Liverpool hospital.

Sources close to Health Secretary Alan Milburn, who is to announce the report's findings to MPs, have already warned that it makes "horrific" reading and have promised tough and prompt action.

At Great Ormond Street, the tissue was removed from living children during heart surgery without the consent of parents and used in the manufacture of anti-rejection drugs in the US.

Great Ormond Street said thymus glands had also been removed and passed to researchers at other hospitals without payment since the 1970s. It is the third hospital to admit to the practice.

Last week, Alder Hey admitted removing thymus glands between 1991 and 1993 and selling them for £5 each to Aventis Pasteur, a leading vaccination research firm with its headquarters in the French city of Lyon.

The company then donated money to the hospital's cardiac department. Birmingham Children's Hospital entered into a similar arrangement with the company.

In a prepared statement, Great Ormond Street admitted receiving a "payment for processing" and said: "The hospital did enter into negotiations with pharmaceutical company Upjohn in 1993, who wanted to use thymic tissue for anti-rejection transplantation serum.

"A one-off shipment of approximately five thymuses was made to the United States and a payment for processing only was made. There is no record of this payment currently to hand. The hospital apologises for any distress caused."

A spokeswoman for the hospital said an unspecified number of thymus glands had been passed to other hospitals without any payment being made.

She said it was routine procedure to remove at least part of the thymus gland during cardiac surgery to gain access to the heart. It was discarded in most cases after operations and regarded as clinical waste.

A spokesman for Great Ormond Street apologised to the parents of the children involved and admitted: "Our current policy would be that no tissue would be used for research or other purposes without informed parental consent."

Speaking at a conference in London yesterday, Mr Milburn said that if the public's trust in the health service was to be restored, fundamental changes were needed to the laws governing parental consent for organ donation.

"For trust to thrive, there has to be informed consent," he said. "Not a tick-in-a-box consent regime but consent that is based on discussion and dialogue, where consent is actively sought and positively given."

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