A rogue strain of the measles, mumps and rubella vaccine has been proven to have caused deafness in at least two children, it has been claimed.
Katie Stephen, who lost the use of her left ear days after being inoculated as a child, is reportedly the first known victim to prove her case to the Vaccine Damage Payments Unit.
But the 21-year-old has been refused the £120,000 payout for vaccine injury because it is only given to people with 60% disablement, according to The Times.
The measure used by the Department of Work and Pensions (DWP) to decide payouts defines single-sided deafness as 20% disablement. It comes after a second victim, who lost hearing in both ears, received compensation in a previous case, the paper said.
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Miss Stephen's mother Wendy told The Times: "She wasn't born this way. This was done to her by the Department of Health. They distributed pamphlets arguing that this was the right thing to do for your child and not just that but the right thing to do for herd immunity in the UK against these three illnesses."
Paul Breckell, chief executive of Action on Hearing Loss, said: "We are disappointed that the formula used by the Vaccine Damage Payments Unit does not fully recognise the impact for Katie in completely losing the hearing in her left ear."
Miss Stephen, from Stonehaven, in Aberdeenshire, was 15 months old when she was given the inoculation in 1991.
A health visitor recorded hearing problems at 18 months old, although previous tests had been normal, and in 1996 she was diagnosed with deafness.
According to The Times, her medical records show that she was deafened by an MMR jab using the rogue Urabe strain of mumps, which was given to 5.4 million British children between 1988 and 1992.
In total, 10 cases of deafness after the jab were formally recorded at the time, the paper said.
An academic study found that the cause of deafness in six of those cases was unknown but MMR was a possibility, it added. Four of the suspect cases had single-sided deafness.
Asked why the industrial injuries measure was being used on vaccine-damaged children, a SWP spokeswoman said: "This is not in regulations - it was considered at the inception of the scheme that disablement should be assessed as a percentage similar to the system as applied in the War Pensions and Industrial Injuries Schemes."
She added: "The payments were set at the same level as the Industrial Injuries Benefit and does provide financial support to those eligible. Those who are eligible for this help may also be eligible for other support from the benefits system."
The Department of Health (DoH) stressed the importance of the MMR vaccine and said it had saved many lives.
Director of Immunisation Professor David Salisbury said: "It is important that parents get their child vaccinated against measles, mumps and rubella - all of which are highly infectious. Uptake rates for the MMR vaccine are at their highest level for 10 years and it is the best way to protect children against all three infections."