The Ministry of Defence denies wrongdoing by British soldiers
The defence secretary has conceded there is a need for a new investigation into the deaths of 20 Iraqis in Basra in 2004, the High Court has been told.
Six Iraqis are asking the court to order a public inquiry into claims UK troops tortured and murdered captives after a fire-fight in May 2004.
Bob Ainsworth apologised for failing to provide enough information for judges to make a fully-informed decision.
The MoD says the dead were killed on the battlefield and denies wrongdoing.
The case is centred on allegations that Iraqi civilians were detained following "the battle of Danny Boy" - a firefight between British soldiers and Iraqi insurgents near the town of Al Majar-al-Kabir, in Maysan Province, on 14 May 2004.
Lawyers for the Iraqis produced medical evidence in court that they said supported allegations that captives were taken to the UK military's Camp Abu Naji, where they were tortured, murdered, and their bodies mutilated.
Five of the six applicants allege they were also mistreated by British forces after being detained.
'Waste of time'
On Monday, Mr Ainsworth conceded there was insufficient information for judges to be able to make a fully-informed decision on the allegations, so a separate investigation was needed.
The court heard a letter from senior government law officer Hugh Giles, which said the defence secretary "profoundly regretted" a failure to make documents available to the court in good time, and that searches for relevant documents "cannot be said to have been effective".
"The secretary of state profoundly regrets these failures. The secretary of state apologises to the court for the difficulties that these failures have created."
Therefore, the letter said, the minister was proposing "an investigation of the murder of Iraqi detainees at Camp Abu Naji in southern Iraq on the night of May 14-15 2004 and specific allegations by five Iraq nationals of ill-treatment".
Following the defence secretary's concession, Lord Justice Scott Baker said the court hearing had to date been "a complete waste of time - at vast expense".
The court was "concerned", he said, that the government had initially sought to withhold information on the grounds that disclosure would be damaging to the public interest.
The defence secretary's concession does not necessarily mean the Iraqi group will be granted their wish for a public inquiry, on which the judges have yet to rule.
In a statement later, armed forces minister Bill Rammell said: "It is clear from the evidence that no-one was murdered or ill-treated by British forces. It is also clear that British forces did not mutilate corpses on the battlefield, and there is independent expert testimony to support this.
"However, these are serious allegations and we regret that we have failed to provide the court with timely and sufficient disclosure of information to enable them to determine the facts."
Mr Rammell added: "A fresh investigation would assist everyone to come to a clear and full determination of the facts."
The disclosure of documents relating to a Royal Military Police investigation, which concluded that British soldiers had done nothing wrong and the Iraqis had died on the battlefield, are crucial to the case.
In May, Lord Justice Scott Baker said the late release of documents had thrown the hearing into confusion, and called it a "totally appalling state of affairs".
As a result, the treasury solicitor and the head of the RMP announced a review into the way government departments release documents to the courts.
The RMP investigation concluded that bodies were taken back to the camp so that insurgent ringleaders - believed to be responsible for earlier attacks on British forces - could be identified.
The MoD says that just nine Iraqi captives were detained at Camp Abu Naji - and that they all left the British base alive.
The Iraqis argue the RMP investigations were flawed and inadequate.
The six applicants seeking an independent public inquiry include Khuder Al-Sweady, uncle of teenager Hamid Al-Sweady, one of the 20 who died.
The court was told the other five applicants were survivors of the Danny Boy incident - Hussein Fadel Abbas, Atiyah Sayid Abdelreza, Hussein Jabbari Ali, Mahdi Jassim Abdullah and Ahmad Jabbar Ahmood.
The case continues.