Despite widespread ill-feeling about the abuse of prisoners by American forces and allegations of mistreatment by British troops, coalition forces will be protected from any legal action.

British and American troops are to be granted immunity from prosecution in Iraq after the crucial 30 June handover, undermining claims that the new Iraqi government will have ‘full sovereignty’ over the state.

Coalition troops will only be subject to the domestic law of their home countries. Military sources have told The Observer that the question of immunity was central to obtaining military agreement on a new United Nations resolution on Iraq to be published by the middle of next month.

The new resolution will lift the arms embargo against Iraq, allowing the country to rearm its 80,000-strong army in readiness for taking over the nation’s security once coalition forces finally leave.

‘The legal situation in Iraq will be very difficult after 30 June, with some confusion over where jurisdiction lies,’ said one Whitehall official. ‘We wanted to ensure that British troops maintained the immunity they already have under Order 17.’

Order 17 refers to an agreement signed by the Coalition Provisional Authority giving American and British troops protection. That will now be extended to the new multinational force made up of British and American forces which will remain in Iraq at the invitation of the interim government.

Last night MPs demanded that Iraqi citizens should have some form of legal redress following allegations that people had died unnecessarily during gunfights with British forces.

‘How is anyone in Iraq expected to bring a case in the British courts?’ said Adam Price, the Plaid Cymru MP for Carmarthen East, who has been credited with uncovering many of the claims made against British troops.

‘It is taking the idea of diplomatic immunity and applying it to 130,000 troops. There is a danger that you are actually going from immunity to being able to act with impunity.’

Price said that there should be a military ombudsman based in Iraq who could investigate any allegations against coalition troops and call for further action.

The British army was facing fresh embarrassment yesterday when the Attorney General, Lord Goldsmith, published a statement admitting that allegations against a British soldier now facing possible criminal proceedings over the death of an Iraqi civilian during an arrest were initially dismissed by the forces.

The Crown Prosecution Service is considering pressing criminal charges against the soldier over the same incident. ‘The case currently under consideration by the CPS was referred to the Attorney General after charges were dismissed by the soldier’s commanding officer,’ Goldsmith said.

‘In these circumstances, the case cannot be tried by court martial.’

Earlier this month the Defence Secretary, Geoff Hoon, said all allegations of mistreatment by British troops were thoroughly investigated by the Royal Military Police Special Investigations Branch.

The soldier’s case is one of the two which he said had now reached ‘an advanced stage with decisions on prosecutions pending’. The first picture of how the new Iraq will look after the handover is now starting to emerge. Senior diplomatic sources told The Observer that the new UN resolution, which will give a legal basis to the Iraqi interim government, will be published in the middle of next month.

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