Sapper Luke Allsopp and Staff Sgt Simon Cullingworth were killed in Iraq
Britain has handed over two Iraqis accused of murdering UK soldiers to the Iraqi authorities despite a European Court injunction against the decision.
The European Court of Human Rights had tried to block the transfer of Faisal Al-Saadoon,56, and Khalaf Mufdhi, 58.
Defence minister Bob Ainsworth said the right action was taken but admitted the men could now face the death penalty.
Both are accused of murdering Staff Sgt Simon Cullingworth and Sapper Luke Allsopp in Iraq in March 2003.
Mr Ainsworth told BBC Radio 5 Live: "We had been put in an extraordinary position with this injunction. They were effectively asking us to do something illegal.
"We have no legal powers to hold these individuals and this was confirmed by the UK Court of Appeal.
"We think it is the right decision that they face trial in Iraq where these crimes were committed."
He said it would not be fair to ask the people holding the men at the base in Basra to put themselves at risk by breaking the law.
He admitted that "in theory" the men could face execution but added: "We don't support the death penalty - we oppose it.
"At the end of the day we have to accept the death penalty is not illegal in international law, it's not illegal in Iraq where the alleged crime was committed."
Phil Shiner of Public Interest lawyers, who have opposed the transfer, said the men's families had been told to prepare for the handover earlier.
The pair's lawyers had earlier argued that allowing them to stand trial in Iraq would violate both the European Convention on Human Rights and the 1998 Human Rights Act.
But three Court of Appeal judges had ruled that after midnight on Wednesday, when the UN mandate for British forces in Iraq expires, Iraqi police could go to the British compound in Basra and remove the prisoners.
On Tuesday, a judge in Strasbourg granted an interim injunction preventing the transfer until further notice.
Defence Secretary John Hutton said the Court of Appeal had ruled the men did not fall within the "jurisdiction" of the European Convention on Human Rights.
Mr Hutton said it would be a "breach" of "international law obligations" if UK continued to detain the men.
He said: "The European Court of Human Rights at Strasbourg has asked the UK to retain custody in Iraq of Mr Al Saadoon and Mr Mufdhi when we have no legal power to do so.
"Compliance with Strasbourg requests would normally be a matter of course but these are exceptional circumstances."
In October 2006 a coroner ruled that Sapper Allsopp, 24, from north London, and Sgt Cullingworth, 36, from Essex were unlawfully killed by Iraqi military intelligence.
The men, who were in the 33 Engineer Regiment - a specialist bomb disposal unit of the Royal Engineers - were ambushed by militia, taken to an Iraqi military compound and shot.
The Court of Appeal judges dismissed claims that Mr Al-Saadoon and Mr Mufdhi's human rights would be infringed by being handed over to the Iraqi authorities to stand trial.
Before their case reached the Court of Appeal it was rejected by two High Court judges who ruled they could be tried in Iraq, but said they were "seriously troubled" owing to the risk of execution.
Mr Hutton said Iraq's government had made assurances that the men would be treated humanely.
However the men's lawyer, Mr Shiner described the government's failure to observe the Strasbourg injunction as "extraordinary and unprecedented".
He predicted the government would "get a roasting" from the European Court of Human Rights for defying its order.
He said he had obtained a new High Court order to stop the transfer but said it would only apply if the men were still within the British base.
However a MoD spokeswoman said the transfer had already taken place.
Mr Shiner said he would be mounting a fresh legal challenge based on the government's breach of the injunction.
Mr Shiner said the government had acted in a "vindictive" manner.
"I am beginning to wonder why the relevant public servants dealing with this case appear to enjoy the prospect of my clients being hung with all the gruesome theatre that involves," he said.