A dossier of evidence from men taken captive after a gun battle near the Iraqi town of Majat-al-Kabir in May 2004 also suggested soldiers tortured and mutilated captives.
Lawyers for five Iraqis today issued detailed witness statements, photographs of corpses and death certificates of the men who died. The allegations first emerged within weeks of the incident and have since been investigated by the Royal Military Police.
The claims, which the Ministry of Defence denies, are among the most serious yet levelled against British soldiers who served in Iraq.
Solicitor Phil Shiner said: "There is the clearest evidence available of systematic abuse and systematic failings at the very highest levels of politicians, the civil service and the military."
He added: "Until we as a nation face up to this evidence we cannot hope for the fundamental reforms required to ensure these things can never happen again.
"We do not want to be talked about in the same vein as the Japanese in the second world war or the Americans at My Lai, but unless we stand up and say as a nation that this cannot happen in our name, that is where we seem to be headed."
Shiner and his colleague, Martyn Day, suggested prisoners captured after the three-hour gun battle may have been taken to a British base at Abu Naji and killed.
Detailed witness statements from the five men - Hussein Jabbari Ali, Hussain Fadhil Abass, Atiyah Sayid Abdelreza, Madhi Jassim Abdullah and Ahmad Jabber Ahmood - described what they heard while in detention, when they were handcuffed and forced to wear blacked-out goggles.
The statements described hearing other men screaming and choking as well as the sound of gunfire.
Abdelreza's statement read: "I believed people were being killed. I have never heard anything like that sound ever before in my life. It shocked me and filled me with such terror."
The lawyers, who are bringing a damages claim in the UK courts, say the five witnesses are labourers who have lived all their lives in Majar and had "absolutely nothing" to do with the Shia Mahdi army, who engaged British troops in the gun battle.
Day said: "The nature of a number of the injuries of the Iraqis would seem to us to be highly unusual in a battlefield.
"For example, quite how so many of the Iraqis sustained single gunshots to the head and from seemingly at close quarter, how did two of them end with their eyes gouged out, how did one have his penis cut off (and) some have torture wounds?"
The solicitors called for an ongoing investigation by the RMP to be taken over by Scotland Yard.
An MoD spokesman said: "Allegations of mistreatment, unlawful killing and mutilation by British troops following an incident at Vehicle Checkpoint Danny Boy were thoroughly investigated by the RMP.
"Their investigation lasted 10 months, involved the interviewing of over 150 British personnel and 50 Iraqi nationals, and found no evidence to support these allegations.
"New allegations are part of an ongoing RMP investigation and judicial review and it would be inappropriate to comment further."
© 2008 The Guardian