A senior judge will lead an independent public inquiry into the death of Baha Mousa, an Iraqi hotel receptionist, who died while being held by British soldiers in 2003.
The Government's decision to agree to investigate fully the events surrounding Mr Mousa's death was welcomed by his family and their lawyers yesterday.
Mr Mousa, 26, who had two children, was arrested with nine other Iraqis and taken into custody by British soldiers after a raid in Basra in September 2003.
A post-mortem examination showed that he had suffered asphyxiation and a total of 93 injuries to his body, including fractured ribs and a broken nose. A court martial last year ended with the conviction of one soldier for inhumane treatment, but the acquittal of six others. The judge hearing the case said that the military investigation had been hampered by what he described as "a closing of ranks".
Phil Shiner, the Mousa family's lawyer, said what had happened was a "disgrace to our nation" and that action was needed to ensure it could never happen again. He said: "Behind the announcement is the human tragedy of the torture and killing of Baha Mousa whilst in detention with UK soldiers in Basra.
"But behind that particular tragedy are more tragic events: in the same incident, another Iraqi was tortured so badly he nearly died; other Iraqis in this incident were badly abused. But it gets worse: these men were kept hooded, forced into painful stress positions and deprived of food, water and sleep."
The Defence Secretary, Des Browne, said: "A public inquiry... is the right thing to do. It will reassure the public that we are leaving no stone unturned in investigating his tragic death. The Army has nothing to hide in this respect and is keen to learn all the lessons it can from this terrible incident."
The Chief of the General Staff, General Sir Richard Dannatt, said: "The Army expects only the very highest standards from all officers and soldiers and any failure to achieve those standards, however rare, is unacceptable to us. We welcome this inquiry... I shall personally ensure that every co-operation is given."
The official terms of the inquiry, which are expected to be confirmed in the next few weeks, will name the judge and any witnesses likely to be called. Lawyers for the Mousa family will press for the former attorney general Lord Goldsmith to give evidence. The inquiry will also examine why the prisoners were subjected to interrogation techniques banned by the Government.