Nick Clegg has called on Gordon Brown to give all Gurkhas citizenship rights and equal pay and pensions.

Speaking in the Commons on Wednesday, the Liberal Democrat leader said he had been handed service a service medal by a retired Gurkha over the government's refusal to grant citizenship.

"Does the prime minister know what it means for a loyal British soldier to give up a medal that he won for his long years of service to this country?" said Clegg.

Brown praised the Gurkhas who have "served loyally in every part of the world" since 1815. "They've done a tremendous job for our country," said the prime minister.

He said this was the first government to have given Gurkhas equal pay and the right to a pension, and the first to give them residence rights in Britain after four years' service.

Clegg challenged Brown over why Gurkhas who retired before 1997 have no automatic right to remain in the UK.

But the prime minister said Gurkhas were given the rights from 1997 because its the date that Gurkhas once based in Hong Kong moved to mainland Britain.

"That's why we are honouring the promises that we made for the period after 1997," he added.

Earlier, 50 veterans handed their medals back to the Lib Dem leader in protest at their "immoral discrimination".