The US and NATO militaries began using bullets made of DU in the 1991 Gulf War and have been using it in every major armed conflict since that time. It is used because it is extremely dense (1.6 times as dense as lead) which makes it ideal for piercing heavy armor. The U.S. used 640,000 pounds of DU ammunition just in the first gulf war alone. In the 2003 invasion they used an estimated 4,000,000 pounds.
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Some sources (There are plenty more if you are willing to do your own research):
Depleted Uranium Particles pass from nose, through optic nerves to brain:http://www.environmentalhealthnews.org/ehs/newscience/inhaled-uranium-enters-...
Concentrations of DU in Bones and tissues:http://www.nap.edu/openbook.php?record_id=9953&page=97
Sub-micron sized DU Particles (U.N. pdf)http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&...
Cancer and Birth Defects caused by DU:http://www.guardian.co.uk/world/2010/dec/30/faulluja-birth-defects-iraqhttp://www.bmj.com/content/319/7207/401.2?view=long&pmid=10445914
DU and Gulf war syndrome: http://news.bbc.co.uk/2/hi/health/270800.stm
Attempts to ban DU: http://www.bandepleteduranium.org/en/a/89.html