The Government has paid off more than 1,000 innocent Iraqis hit by botched British military operations that resulted in deaths, injuries and major damage to property.
An investigation by The Independent shows that the payments, many of them as small as a few hundred pounds, leave the Ministry of Defence with compensation bills of £8.3m for the Iraq conflict.
British troops finally pulled out of Iraq in 2009, after six years of bloody fighting which followed the US-led invasion to topple Saddam Hussein.
The Ministry of Defence has so far had to pay £4.2m as a result of 1,145 claims made by Iraqis who had been injured, had relatives killed or had their property damaged by British military operations.
A further £4.1m has been handed to 21 Iraqi victims subjected to unlawful treatment or torture by British troops and the family of a child who was accidentally shot.
Human rights groups last night called for a broad public inquiry into the actions of British troops in Iraq.
Attention has focused on cases in which Iraqis were abused by British soldiers, such as that of Baha Mousa, who died in British custody in September 2003. However, the bulk of the compensation was paid out in small amounts to Iraqi families after being agreed locally, before they ever consider taking their case through the British courts.
The average figure paid out was £3,650, way below the £2.8m handed in 2008 to the family of Mr Mousa and others mistreated by British troops in Basra, after their cases were taken to the High Court. One such case saw the family of Waleed Muzban, alleged to have been shot dead at a British checkpoint on 24 August 2003, handed around £550 by the MoD.
The principle of paying compensation to a victim or their family is an established part of Iraqi tradition.
Sir Menzies Campbell, the former Liberal Democrat leader, said that the £8.3m bill was an "eloquent postscript" to Tony Blair's decision to take Britain to war.
"If we hadn't been engaged in an illegal war, then these payments would not have been made. They are an eloquent postscript to the error that was made in joining with the United States in unjustified military action," he said.
"It was perhaps just as well for our reputation that so many of these cases were settled informally, without coming to court."
The small payments were agreed by the Area Claims Office in Basra, which dealt with over 3,260 claims before shutting its doors in October 2009.
A Ministry of Defence spokesman said yesterday: "When compensation claims are received they are considered on the basis of whether or not the Ministry of Defence has a legal liability to pay compensation. Where there is a proven legal liability, compensation is paid."
The Independent has also seen official figures revealing compensation paid out to Afghanis. Since 2007, 1,142 claims have been paid, totalling £825,000. Payments for damaged property made up £658,000 of the bill, with £62,000 paid out for injuries sustained and £105,000 paid as a result of fatalities.
Human rights groups were dismayed by the Iraqi compensation figures. "The human cost of the Iraq war has been staggering, in terms of killings and maiming of civilians and other gross human rights abuses against civilians, at the hands of coalition forces, Iraqi government and armed groups," said Kate Allen, the UK director of Amnesty International.
"People's lives have been devastated and in cases where the UK is responsible, those affected by abuses are fully entitled to adequate compensation. Just as important, though, is that all those responsible for abuses are brought to justice."
Tom Porteous, London director of Human Rights Watch, added: "The high level of compensation payouts underlines the need for a full inquiry into UK abuses in Iraq."
The grim figures emerge as the Chilcot inquiry into the Iraq war prepares to return for further evidence later this month.
The Independent has learnt that the Chilcot inquiry team last week met in private with General Petraeus – the US military chief who oversaw the "surge" tactic which quelled violence in Iraq – at the US embassy in London.
Lady Manningham-Buller, the head of MI5 at the time of the Iraq invasion, who has already said she had doubts about the invasion before it went ahead, will appear at the inquiry later this month.
Hans Blix, the chief UN weapons inspector who asked for more time to investigate the extent of Saddam's weapons programmes, has also been called. Other witnesses will include General Sir Mike Jackson, the then head of the Army, and John Prescott, the former deputy prime minister.
Waleed Muzban: A father shot dead, a family given £550
The family of Waleed Muzban, killed on 24 August 2003, are among the thousands to have been handed a tiny figure by Britain's Ministry of Defence to compensate them for their loss.
Mr Muzban, a 44-year-old father of two from Basra, was driving a minibus to his brother's house and was allegedly shot dead at a military checkpoint. His family was given compensation of two million dinars, around £550 then. They say they were told it was an interim payment, but heard nothing more. Mr Muzban's brother, Fadr, told The Independent at the time that while a British soldier had shouted at Waleed to stop the van, he may not have heard because it was a very windy day. "Then they opened fire and he was hit by two bullets in the chest and side," he said. "He died instantly.
"The British Army said it was an accident and they were sorry. We received some compensation, but around 600,000 dinars of the notes turned out to be fake. We were told the British Army is investigating the matter, but we have heard nothing more."
Following the tragedy, Fadr looked after his brother's widow, Sohan, and her two children, Ali and Haneem, pictured left. Mrs Muzban said: "My children have been left without a father and I do not know what we can do in the future."
History of payouts
In the months following the US-led invasion of Iraq in March 2003, the Ministry of Defence set up the Area Claims Office, in Basra, to deal with the compensation claims it received from Iraqis affected by British operations. It dealt with more than 3,260 claims before closing in 2009. All the claims submitted to the office were dealt with before its closure.
Now, anyone who feels they are entitled to a payout is instructed to contact the Foreign Office in Basra to have their claim investigated.
Making the early and informal payments to Iraqis to compensate them for injuries and property damage, and deciding on the sums involved locally, is far cheaper than leaving open the possibility of far bigger figures being paid out should cases arrive at the doors of the British courts.
Those that have ended up at the High Court recently have proved the point. In July 2008, the Ministry of Defence paid £2.8m to a group of Iraqis allegedly mistreated by British troops in Basra.
The figure was arrived at after "mediation" with the Iraqis' solicitors and was divided between 10 families affected by the alleged mistreatment.