Thanks for this reply.

When I enable WAN1 on the 2860 (direct phone line connection) my smart phones, laptops, PCs, TVs etc all function properly. Only the thermostat does not.

The thermostat works by connecting to Nest servers and is then accessible in a browser on the Nest website and via a smart phone app. All communication is over the internet it is not a lan-lan connection.

The thermostat always connects successfully to wifi however trying to login to my Nest accounts on the thermostat OS returns errors telling me that an internet connection is unavailable if I use the Draytek with WAN1 enabled.

Replacing the Draytek with a Homehub (WAN1 only) allows the Nest to connect over my BT connection. Using the Draytek enabling both WAN1 and WAN2 does not provide the Nest with an internet connection (despite all other devices having connectivity). Disabling WAN1 and using WAN2 only (radio broadband) allows the thermostat internet access. The OS on the thermostat is reporting connectivity problem so the issue rests with the thermostat-router not another device as far as I can tell.

I am factory resetting the Nest after any router reconfiguration/swap to ensure that out of date settings are not causing an issue.

Stumped!

well i am not that experience with the thermostat but if the smartphone is connecting fine to 2860 wifi network it could be thermostat issue?
i will say to contact their support as well mention the issue "no internet connectivity when try to log in" if they can point few settings
in the meantime check if the wifi meter of of the Nest is below 50% signal
try log in again with an other smart phone or laptop
try if you can change a simplest password with the 2860 8 the Nest

How ever i can point few settings at the 2860 if will help you
first option is to disable wps ... Wireless LAN >> WPS (Wi-Fi Protected Setup) ... reboot both & try again
Lan>bind ip to mac, have you got any strict bind ip addresses enable there?
LaN Genral setup > Details page > Retrieve IPs from inactive clients periodically, untik this box & also is DHCP enable & ceck the dhcp ip range
Set wifi only to N mode and try again,
Finally & maybe important ... what firmware has the 2860 right now?

and last if you resetting the Nest does need new password again? or it keeps the same?

Have now tried all of these things without joy.

Given that wifi is working, that I have a valid ip lease for the thermostat, that I can ping it and if WAN1 is disabled the thermostat works I absolutely discount it being a wifi issue.

I have tried the last 3 firmware releases all with the same result.

It has to be as routing issue.

Fast thinking I will need to dump the Draytek altogether!

the last think from me is to register that ip address (as long is in with the range of the draytek) at bind ip to mac
http://www.draytek.com/.upload/pdffiles/c0671fe79c540364c1b068d1d87d485b.pdf

Also email the support to provide you logs if needs and maybe some more professional advise
http://www.draytek.co.uk/support/techquery

Finally some success!

I have set the Nest up as a True IP DMZ Host and all is working well.

Am I safe to leave it setup as such, what are the security implications? Is this likely to cause me other routing problems on my LAN.

Thanks for your thoughts.