The injured man had befriended British soldiers
An Iraqi teenager accidentally shot by a British soldier is to receive £2m, the Ministry of Defence has confirmed.
The man - who cannot be named for legal reasons - will receive the payout after suffering severe spinal injuries which have left him paralysed.
The payout is higher than anything paid to any British troops injured in Iraq.
The MoD said it was "not a precedent, it is an exceptional case", but admitted similar payouts were possible in the future.
The man was wounded in September 2003 when a British soldier, whom he had befriended, accidentally dropped his gun, making the weapon go off.
The Iraqi, who was aged 13 at the time of the accident, later moved to the UK where he began legal action through the British courts.
The final settlement is dependent on a further High Court hearing.
Personal injury settlements can vary widely and are determined by a number of factors, including the degree of personal harm, loss of future earnings and the cost of future care.
There are concerns the case could set a precedent, and pave the way for further large compensation claims by Iraqis against the British government.
The MoD said it did not expect any other cases of "such severity", but a spokesman said it was hypothetically possible for similar claims to be successful.
He said: "If it was a similar case, I think you would expect a similar kind of payment. I think what we are saying is that this is an exceptional case because it was a tragic accident."
The Iraqi teenager was able to bring his claim through the British courts, because anyone can make a claim if the government is negligent under its legal liability, regardless of where it took place, so long as the claimant can bring legal representation in the UK.
However, the MoD spokesman said that because of military rules of engagement, this did not mean anyone injured by British troops could claim for compensation.
He said there was "a world of difference between someone being caught in the cross-fire while engaging with the enemy and a young boy hanging around the gates and getting shot."
The MoD also rejected comparisons with the Armed Forces Compensation Scheme for injured British troops, which offers individuals a maximum lump sum payment of £285,000.
It said that in addition to this sum, the most seriously injured receive a guaranteed income payment, which is tax-free and index linked, for the rest of their lives - and this can total hundreds of thousands of pounds.
But the MoD said there was no award for aftercare, which can be the factor determining very high payouts following personal injury cases.
The spokesman said: "When it comes to care, the position is that future care is provided through the NHS or the state.
"Where the Armed Forces Compensation Scheme doesn't pay for care, that is because funding is available through other government routes without cost to the individual."
Liberal Democrat treasury spokesman Vince Cable said other Iraqis may now try to take legal action through the UK courts.
"The government claims that this is a completely unique case, but it is very difficult to believe that that is the case," he told Channel 4 News.
"If Iraqis were able to get access to British courts, they would clearly be entitled to much higher levels of compensation, based on this precedent.
"The costs of that could be very, very considerable indeed, adding to all the other costs of the Iraq war."