LONDON (AP) _ A newspaper reported Sunday that Britain had supplied Iraq with ''substantial quantities of uranium'' suitable for the manufacture of nuclear weapons. The government denied the report.

The newspaper also quoted Dr. Hussein Shahristani, exiled former head of the Iraqi Atomic Energy Commission, as saying depleted uranium from Britain had been used in the bomb-building program of Iraqi President Saddam Hussein.

The Sunday Times, in an early edition Saturday night, said customs records showed that Iraq paid nearly $1.69 million for three large consignments or 9.46 tons of depleted uranium and other radioactive materials.

They were shipped from Britain under goverment license between 1988 and 1990, the newspaper said.

A spokesman for the Department of Trade and Industry said, ''Almost all of the shipments were actually tiny radioactive isotopes for medical use, not depleted uranium.''

He said the weight of the isotopes reported by the newspaper was incorrect and that they were packed for shipment in substantial quantities of lead and dry ice.

''The packaging accounts for the weight. We told the Sunday Times this,'' he said.

In reponse to first reports last week of British exports to Iraq, Trade and Industry Secretary Peter Lilley said his department had licensed ''very small quantities.''

The Sunday Times said Amersham International, a commercial supplier of radioactive materials, said Saturday that it supplied about 220 pounds of depleted uranium to Iraq in 1988. It was part of a batch of equipment for the oil industry, the newspaper said.

The newspaper quoted Hussein Shahrastani as saying British shipments of depleted uranium to Iraq had been processed at the Tuwaila nuclear research center south of Baghdad.

The Sunday Times quoted a senior British official as saying none of the uranium would have been licensed for export if Britain had been aware of Saddam's capability for enrichment.

On July 26, a government document was made public, saying Britain authorized exports of a range of nuclear materials to Iraq during a 3 1/2 -year period that ended last Aug. 5, three days after the Iraqi invasion of Kuwait.

Prime Minister John Major said, ''The vast majority of goods that were exported to Iraq in the late 1980s did not require export licenses, but the United Kingdom did impose controls over a number of sensitive goods.''

Major said all applications to ship material to Iraq were scrutinized by inter-departmental committees, and licenses were granted only ''in special circumstances and or subject to strict conditions.''

Britain banned the export of arms to Iraq and Iran in 1980 after the start of the war between the two countries.