The only surviving Gurkha to hold the Victoria Cross -- Britain's highest military honour -- told lawmakers on Wednesday he was "shocked" when he learned that the Nepalese warriors were being treated as "third-class soldiers".

Captain Rambahadur Limbu, 74 -- who was awarded the exceptionally rare VC for his bravery in action during the Indonesian Confrontation in 1965 -- spoke to an inquiry examining Gurkhas' welfare grievances.

The cross-party panel is considering Gurkhas' appeals for the same pay, pension and facilities as their comrades in the British army.

The war hero said he had never had complaints about his treatment during his 28 years of service in the British army, but after retiring he came to the view that Gurkhas were being treated "like third-class soldiers by the British government".

"I could not believe it. Only when I began to know more differences between the British and the Gurkha soldier benefits, I was shocked," he told the MPs.

"When I came to know that our trusted friends have cheated us and stabbed us from the back, I felt very bad. Where is the debt of honour that this country owes to the Gurkhas?"

Wearing his heavy row of medals on his left breast and walking with a stick, Limbu posed for pictures outside the Houses of Parliament.

Other issues being considered include adult dependents, medical care in Nepal, benefits and allowances, and the Gurkha communities in Britain.

Lawmaker Jackie Doyle-Price, who is chairing the inquiry, said the process would give Gurkhas the opportunity to make their case.

She said the Gurkhas were a "much-valued part of the British army" and were held in high esteem and affection by the public.

But despite "significant developments" in their pay and conditions and the extension of the right to settle in Britain, "there remain some outstanding grievances which the Gurkhas are determined to have addressed," she acknowledged.

The public hearings will continue into April. Campaigners hope for a debate in parliament on the inquiry's recommendations.

The Gurkhas are known for their ferocity, loyalty, bravery and razor-sharp kukri fighting knives. They first served as part of the Indian army in British-run India in 1815.

Around 200,000 fought for Britain in World Wars I and II; some 43,000 were killed or wounded. Around 3,100 currently serve in the British army.

With the 200th anniversary of 1815 in mind, Limbu told the inquiry he hoped Britain would "do justice to all my fellow Gurkhas by giving them equal pensions and benefits".

"This will give us a reason to forget the past discriminations, look forward to a life of dignity and celebrate the long bilateral relations," he said.

The extremely rare VC, given for valour in the face of the enemy, takes precedence over all other military honours.

Besides Limbu there are only three other living holders of a British VC, four of the Australian VC and one of the New Zealand VC.