Royal Military Police have arrested a man in connection with video footage of British troops allegedly abusing Iraqi civilians, the Ministry of Defence confirmed.
He was detained at 8.18pm last night but officials refused to say where or confirm if he was a serving soldier.
An MoD spokesman said: "The RMP investigation into these extremely serious allegations is at very early stage.
"We can confirm that an arrest has been made in conjunction with this investigation."
The MoD spokesman said: "The arrest took place at 8.18pm on Sunday. It would be inappropriate to comment further."
Iraqi prime minister Ibrahim al-Jaafari has called for a rapid investigation into the footage.
Dr Bashar Al Naher, a UK-based spokesman for the Iraqi prime minister, urged Tony Blair to bring the perpetrators to justice immediately.
Mr Blair promised a thorough investigation into the incident which is being broadcast to outrage across the Middle East today.
Arab satellite television stations, including Al-Jazeera and Al-Arabiya, are replaying the footage alongside images from the Abu Ghraib prisoner abuse scandal involving American soldiers.
Released by the News of the World, the images, taken in southern Iraq two years ago, show troops kicking, punching and striking young civilians with batons, while a colleague filming the footage is heard laughing.
Mr Blair said: "We take seriously any allegations of mistreatment and those will be investigated very fully indeed."
But, speaking at a summit of centre-left leaders in South Africa, he insisted the "overwhelming majority" of British troops behaved properly and did a "great job for our country and for the wider world".
He said: "Any allegations of mistreatment we investigate, but they deserve our fullest support in the work they are doing."
The Royal Military Police are planning to interview witnesses, visit the scene and speak to any alleged victims before drawing up a report for the Army Prosecution Authority.
The soldiers are shown apparently dragging four youths into an army compound from the streets where groups of young Iraqis had been throwing stones at soldiers.
The cameraman is heard laughing and saying: "Oh yes! Oh Yes! You're gonna get it. Yes, naughty little boys. You little f***ers, you little f***ers. Die. Ha Ha."
His running commentary has provoked condemnation across the Middle East as has the fact that other soldiers walk by and do not intervene.
The News of the World said the tape, shot in 2004, was shown at the troops' home base in Europe before being handed over by a whistleblower.
Major Peter Cripps, an Army spokesman in Basra said there had not yet been any recriminations on the streets of the southern Iraqi city, where most of Britain's more than 8,000 troops are based.
But Basra City Council chief Mohammed al-Abadi said local leaders wanted quick action and assurances that Iraqis would not be "humiliated further".
"We condemn and denounce this criminal and brutal act. Iraqis don't deserve such treatment," he said.
Akil al-Bahadily, an official from the Basra office of radical Shiite cleric Muqtada al-Sadr, said: "This is good proof of the violations of human rights being committed by British troops in Basra."
But many Iraqis would consider the actions "normal compared to what happens behind closed doors, which is greater", Basra resident, Muhannad al-Moussaoui, pointed out.
All political parties were united in their condemnation of the scenes shown in the footage.Reuse content