Private security firms operating in Iraq are committing human rights abuses, a charity has claimed.
Security problems have meant private firms are in demand
A report by War on Want says no prosecutions have been brought despite hundreds of complaints of abuse.
And the charity is calling on the government to introduce legislation to ban private security in war zones.
Lt Col Tim Spicer, whose Aegis security firm operates in Iraq, said they worked under "very strict rules" and could be prosecuted if they did anything wrong.
War on Want claims UK ministers are increasingly using private security firms with a total of 48,000 employees in Iraq - six to every British soldier.
John Hilary, the group's campaigns and policy director, said the Iraq war "has allowed British mercenaries to reap huge profits".
"But the government has failed to enact laws to punish their human rights abuses, including firing on Iraqi civilians.
"How can Tony Blair hope to restore peace and security in Iraq while allowing mercenary armies to operate completely outside the law?
"We call on the government to introduce tough legislation as a matter of urgency to ban the use of mercenaries in these conflict situations."
The report is published on the opening day of the first annual conference of the British Association of Private Security Companies in London.
Col Spicer said it was "completely inaccurate" to suggest that security firms operated outside the law.
He said: "If a British or US citizen - or a citizen of any other country - committed an offence, it is perfectly possible for the government of that country to implement a prosecution against them."
But he said he supported proper regulation of the industry because it would "dispel a lot of the myths and make the situation much clearer".
"It would add clarity to what people can and can't do and where they stand with regard to the law."
Earlier this year the US army launched an inquiry after a video posted on the internet showed an Aegis Defence Services contractor firing at civilian cars in Iraq.
But it said no charges should follow and an investigation by Aegis found that the incident was within the rules on the use of force by civilian personnel.