THE discredited £60 million UK Government probe into allegations against Iraq war veterans is to be shut down within months, Sir Michael Fallon, the Defence Secretary, has announced after pressure from MPs.

The Iraq Historic Allegations Team[IHAT] will close in the summer and around 20 cases will be dealt with by the Royal Navy Police, Sir Michael said.

It comes after a scathing report by the Commons Defence Committee, which said the investigation had subjected serving and retired troops to "deeply disturbing" treatment and had "directly harmed" UK defences.

MPs set out a litany of failures about the way the Ministry of Defence, which created IHAT, had handled the probe.

They blamed the department for empowering law firms to generate cases that lacked credibility on an "industrial scale".

They criticised it for "serious" failings after it handed over more than £110,829 to Abu Jamal, an Iraqi middleman, while he was employed by Public Interest Lawyers[PIL], the now defunct firm behind many of the claims.

Phil Shiner, who ran PIL, has since been struck off after being found to have acted dishonestly in bringing murder and torture claims against Iraq war veterans.

The committee said it was "deeply concerned" the MoD had used public funds to cover the costs of those who were bringing "spurious and unassessed" cases against the war veterans and about the lack of support for those accused.

IHAT investigators used "intimidatory tactics", including "deeply disturbing" methods such as impersonating the police. Serving and retired soldiers have also been spied on, the report found.

The damning report said the catalogue of serious failings in IHAT's conduct pointed to a loss of control in its management.

It added: "Both the MoD and IHAT have focused too much on satisfying the accusers and too little on defending those under investigation."

IHAT was set up by Labour in 2010 to assess claims of abuse by Iraqi civilians against troops who had served there.

It started out with 165 cases but the allegations rocketed with the caseload reaching more than 3,500, despite many having no credible evidence, and pointed out that no prosecutions have been secured. Most cases were generated by two law firms, PIL and Leigh Day.

The UK Government said it had not been able to shut down IHAT sooner because the conduct of the investigations was under scrutiny by the High Court and the International Criminal Court.

Sir Michael said: "It was the MoD that supplied the main evidence that got Phil Shiner struck off for making false allegations against our Armed Forces. Exposing his dishonesty means many more claims he made can now be thrown out and the beginning of the end for IHAT.

"This will be a relief for our soldiers who have had allegations hanging over them for too long. Now we are taking action to stop such abuse of our legal system from happening again."

MPs were told that the war veterans had been "hung out to dry", with one becoming a recluse, because there had been a lack of military support.

The Defence subcommittee inquiry, chaired by former army captain Johnny Mercer, said Iraq veterans had been treated in an "unacceptable manner as a result of serving the United Kingdom".

The Conservative MP said: "Throughout this process there has been an almost total disregard of the welfare of soldiers and their families. We need to hold our people in the highest esteem and a repeat of IHAT must never be allowed to happen again.

"The MoD must take responsibility for allowing this to happen. They could have discriminated between credible and non-credible cases yet they lacked the will to do so," he added.

A Leigh Day spokesman said the firm welcomed the committee’s assertion that the UK's military must be equally subject to the law as any civilian, whether in barracks or on operations.

Noting how it had referred 15 cases to IHAT, he added: "We will continue to represent individuals including service personnel and citizens in this country and overseas against this Government. The cases we are taking in relation to alleged abuses against Iraqi citizens are brought solely against the MoD and not individual soldiers.

"We will continue to defend ourselves fully and vigorously against the allegations made against the firm by the SRA (Solicitors Regulation Authority) when we go before the Solicitors Disciplinary Tribunal later this year. The allegations being brought against us are separate to those brought against Public Interest Lawyers."