A facility near Baghdad that a US officer had said might finally be "smoking gun" evidence of Iraqi chemical weapons production turned out to contain pesticide, not sarin gas as feared.

A military intelligence officer for the US 101st Airborne Division's aviation brigade, Captain Adam Mastrianni, told AFP news agency that comprehensive tests determined the presence of the pesticide compounds.

Initial tests had reportedly detected traces of sarin - a powerful toxin that quickly affects the nervous system - after US soldiers guarding the facility near Hindiyah, 100 kilometres south of Baghdad, fell ill.

Captain Mastrianni said a "theatre-level chemical testing team" made up of biologists and chemists had finally disproved the preliminary field tests results and established that pesticide was the substance involved.

He said that sick soldiers, who had become nauseous, dizzy and developed skin blotches, had all recovered.

The turnaround was an embarrassment for the US forces in the region, which had been quick to say that they thought they had finally found the proof they have been actively looking for that Iraq was hiding weapons of mass destruction.

A spokesman for the US army's 3rd Infantry Division, Major Ross Coffman, had told journalists at Baghdad's airport that the site "could be a smoking gun".

"We are talking about finding a site of possible weapons of mass destruction," he said.

The fact that the coalition forces have come up with no clear evidence of WMD after capturing much of Iraq in 19 days of fighting has raised questions over the war's justification.