peers' worries over a university research project which involves recruiting and paying 600 homosexual men to have anal intercourse were dismissed by the Government yesterday.

Education and Employment Minister of State Baroness Blackstone defended the clinical trials at City University, London, and denied that they might involve some of its 8000 students.

Raising the issue at Lords question time, Tory former MP Baroness Knight of Collingtree asked if there was insurance cover or whether there would be compensation available for men who might become infected with HIV during the study.

Lady Blackstone assured the House: ''No students at City University, or elsewhere, are involved. The participants are recruited through gay organisations.

''I don't believe that there is an insurance issue here, since the project involves clinical trials which will be about protecting the health of homosexual men.''

She said 300 gay couples were involved, and each person would be paid #20 ''for answering 10 long questionnaires''.

She stressed: ''It is standard practice to pay a small sum to compensate people for giving up substantial amounts of their time.''

Lady Knight said that parents were ''severely worried'' that vulnerable youngsters might try to earn extra cash as volunteers.

''Many students are impecunious and some will feel this is a very easy way to earn #40 . . . and they are all aware of this project.''

She added: ''Is it not odd that a university with no medical research department should have embarked on this project?''

Lady Blackstone said the study had been ''very carefully considered'' by the university's ethics committee and a decision had been taken beforehand that ''no student at the university should be involved''.

She insisted she had no powers to intervene in the issue as all universities were ''independent, autonomous bodies'', responsible for determining their own educational and research priorities.

But Tory former minister Earl Ferrers called on the Minister to ''condemn this particularly appaling practice''.

He declared: ''It is not the proper function of a university to carry out research of this nature.''

Tory the Rev Lord Milverton, an Anglican clergyman, condemned the study as ''wrong and unethical''.

Lady Blackstone insisted: ''I don't believe people's personal views are relevant to this issue.''

City University has three campuses, at Northampton Square, near the Angel; a Business School in the Barbican, and a School of Nursing at St Bartholemew's Hospital. It also offers a wide

span of graduate and post-

graduate courses, including sciences, the arts and media.