A killer bug has been identified as the culprit that struck down more than 200 guests at the Marriott Castle Harbour Hotel last weekend.

And Government is now launching an inquiry into why its own health experts failed to spot the bug when it carried out tests at the hotel the day before the epidemic struck.

Last night hotel bosses revealed to The Royal Gazette that traces of the E.

coli bacteria were found in the hotel's water when it's own experts carried out tests last Monday.

The shock revelation has renewed calls for the Government's Chief Medical Officer to resign over his handling of the affair.

In 1996 the bug killed 20 people in Lanarkshire, Scotland and more than 100 others fell ill.

Government health officials were called to the hotel on Friday, February 13 after a handful of guests complained of feeling ill.

But the team ruled out that the water was contaminated and instead said they believed an airborne virus was responsible. Within 48 hours more than 200 people were violently ill after drinking the hotel's water.

And, despite the fact that it was known that E. coli was in the water system, health bosses have stuck to their original diagnosis that an airborne virus was probably responsible for the epidemic.

Last Tuesday -- the day after hotel health experts pinpointed contaminated water as the cause of the outbreak -- the Government's Chief Medical Officer Dr. John Cann insisted that the hotel's water system was in no way to blame.

"The tests of water showed some minor contamination but not enough to cause this sort of problem,'' he said.

The hotel's own health advisor has since dismissed Dr. Cann's diagnosis, admitting that levels of the bacteria were dangerously high. "As soon as we did the tests we realised that we had a high level of bacteria and that that was the possible cause of the outbreak,'' he said.

Last night Dr. Cann could not be contacted to explain why he ignored the hotel's own findings when he insisted that the water was clear.

But the revelation has fuelled speculation by some victims of the bug that the Health Department is attempting to cover up the fact that it failed to spot the bug earlier.

One victim, who did not wish to be named, said: "Dr. Cann should resign or be sued. They screwed-up when they gave the hotel the all clear on the Friday.

Now they're trying to blame it on some virus but that's just a red herring.

The water supply was contaminated and they knew that last week and yet they keep coming out with this virus theory because they don't want to look stupid.'' Acting Health Minister Quinton Edness confirmed that an inquiry into the matter has now been launched.

"I am looking into it and we have to have some in-depth inquiry as to why this wasn't spotted earlier,'' he said.

The hotel now faces a massive compensation bill and has already agreed to make a donation of $15,000 to the Coalition for the Protection of Children -- the charity that held a fundraising dinner at the hotel last weekend.

Charity chairwoman Sheelagh Cooper emphasised that the offer did not block the way for individuals to seek their own compensation claims.

"We made it very clear to the Marriott that this donation should in no way prejudice the opportunity by those who were affected by this contaminated water to request and receive compensation,'' she said.

"The hotel executives have indicated to me that they intend to offer compensation to all the people who became ill. I believe they plan to offer them a refund of the full price of the ticket -- $150 -- with the option available to have this donated to the Coalition if they wish.'' The hotel has also agreed to compensate anyone else affected by the bug.

General Manager Mark Conklin said: "We have a list of people who we will be contacting.

"We are trying to do everything right and have taken all the precautions. We disconnected the water supply last Monday as soon as we found that there was bacteria there and tomorrow we will start a super-chlorination programme.'' Mr. Conklin refused to be drawn on whether or not the hotel would now be taking legal action against the Government.

"We're just trying to get to the bottom of this right now,'' he said.

"We are working with the health department and now is not the time to start blaming people.''