Military police have arrested a serving soldier after pictures appearing to show UK troops abusing Iraqi civilians were published in a UK newspaper.
The images have been broadcast in the Middle East
Cpl Martin Webster of 1st Battalion The Light Infantry was detained on Sunday after the News of the World carried images it said came from a 2004 video.
The Ministry of Defence has not confirmed if Cpl Webster was being questioned as a witness or a suspect.
The MoD said other members of the same unit were "helping with inquiries".
The 1st Battalion is no longer in Iraq, having completed its last tour of duty in April 2004 and returned to its base in Paderborn, Germany.
The unit played an important role in the British drive into Basra and helped to seize the Al-Zubary suburb.
The ministry said it was not yet certain which units were shown in the video.
But it is thought the apparent abuse happened during the deployment of 20 Armoured Brigade.
As well as 1st Battalion The Light Infantry, it included 1st Battalion the Royal Regiment of Wales, the Queen's Royal Hussars and 26 Royal Artillery.
An MoD spokeswoman said it would provide further information about the investigation "when it is appropriate to do so".
"The MoD takes the responsibility for conducting investigations very seriously and will not comment on any information that may prejudice an ongoing investigation or breach a duty of care to our servicemen and women," she added.
A Downing Street spokesman said the claims would be taken very seriously, but said it was important to keep the latest abuse claims in perspective.
Cpl Webster was arrested on Sunday evening
He said 80,000 soldiers had served in the country since 2003, but this was only the sixth case to involve allegations of deliberate abuse of Iraqi civilians.
"No-one is trying to play down allegations of this kind, but it is important to keep it in perspective," he said.
He added it was important to show the public in Iraq and the UK that the government "abhors" any kind of abuse.
Prime Minister Tony Blair, who was in South Africa at the weekend for a summit on poverty and development, promised on Sunday the claims would be investigated.
Iraqi national security adviser Mowaffaq al-Rubaie has called for an "immediate and rapid investigation".
Mr Rubaie said the allegations, if they were true, were "not acceptable".
He called for Iraqis to take part in the investigation, adding that any soldiers found to be responsible "must compensate those victims and apologise to them directly".
The News of the World said the images came from a "secret home video" taken outside a military compound in the south of the country.
Soldiers were shown beating and kicking youths in an attack which is said to last for one minute, with 42 blows counted.
The video images have been carried by satellite news channels the Middle East, but an Army spokesman in Basra said there had not yet been any recriminations on the streets.
Basra City Council chief Mohammed al-Abadi said local leaders wanted quick action and assurances that Iraqis would not be "humiliated further".
On Monday, meanwhile, BBC News programmes showed footage of a street disturbance minutes before the alleged assaults.