Heroin was discovered when police raided Alexander Skelly's house in Craigmore Street on 2 April last year. Officers also discovered £1,350 in cash in the bedroom and a further £180 after searching Skelly, 42. Sentence on Skelly, who has previous convictions for drugs offences, was deferred until next month. The High Court in Edinburgh heard that when police arrived at Skelly's house they asked if there were drugs in the property. He replied "just that smack there," indicating a bedside cabinet. Officers found a bag containing 37g of the drug on top of the cabinet, but then discovered another 17 wraps of brown powder each weighing about 27g within drawers. The prosecutor said a total of 507g of heroin were recovered in the raid, which police experts estimated had a wholesale value of £18,300 but could be worth £50,700 when broken into street deals.

Gangs involved in a bitter feud on the streets of Edinburgh have armed themselves with machine guns, it was claimed today.Criminals from the north of Edinburgh have allegedly got their hands on a machine gun, believed to date from the Second World War, as well as ammunition. In turn, the gang – who are involved in the heroin and cocaine trade – are said to be fearful of reports that their rivals in the Inch area have acquired a Mac 10, an automatic weapon.Police today would not comment on the allegations. The Metropolitan Police has been searching for 40 missing Mac 10s used in a string of killings across Britain in the wake of last month's jailing of a gunsmith who sold converted models. The guns are notoriously difficult to acquire in gangland circles and are rarely seen in Scotland.The two gangs in the Capital have been locked in battle for around a year. Both sides are already believed to have pistols and shotguns in their arsenal, but reports of heavier weaponry being available have sparked fears of escalating violence.The north Edinburgh gang are also being linked to Afro-Caribbean "Yardies" from the Wolverhampton area. Sources say weapons were brought north to the city recently as the gang sought to prepare itself for further conflict.The young criminals, most in their late teens or early 20s, have been feuding with a drug kingpin and his cohorts based in The Inch. Worried gang members are believed to have held a "crisis meeting" recently and have moved to recruit other young dealers from surrounding areas, such as Lochend and Leith, to their ranks.The Inch gang boss is thought to control much of the city's supply of cocaine, with ambitions to become a figure like the former Glasgow gangster Paul Ferris. Sources say he uses gunmen on motorbikes to settle scores and further cement his dominance of the drug trade. He is said to be considering buying into a private hire cab company in Edinburgh, to help launder drug cash.Sources say the north Edinburgh gang are "loose cannons" but they are "afraid" of what their rivals are capable of. One source said: "They have heard that this gang has a Mac 10. It's frightening if that's the case."It is not known how the criminals managed to acquire the machine gun, which is believed to more than 60 years old. "I know folk are getting worried about getting in the crossfire because these weapons wouldn't be very accurate," added the source.Gunsmith Grant Wilkinson, converted 90 replica Mac 10s machine guns into weapons that have been linked to at least eight murders in the UK. Police have recovered 50 but have failed to locate the rest despite offering a reward of £400,000 – £10,000 per gun. The Mac 10 fires 33 rounds in less than two seconds and at less than a foot long, is easily concealed.