A DISCREDITED £60 million Government probe into allegations against Iraq war veterans will be shut down within months after pressure from MPs, Defence Secretary Sir Michael Fallon has announced.

The Iraq Historic Allegations Team (IHAT) will close in the summer and around 20 cases will be dealt with by the Royal Navy Police.

It comes after a scathing report by the Defence Committee said the probe had subjected serving and retired troops to “deeply disturbing” treatment and had “directly harmed” UK defences.

MPs set out a litany of failures about the way the Ministry of Defence, which created IHAT, has handled the probe.

They blamed the department for empowering law firms to generate cases which lacked credibility on an “industrial scale”.

And they criticised it for “serious” failings after it handed over more than £110,829 to Abu Jamal, an Iraqi middleman, while he was employed by Public Interest Lawyers (PIL), the defunct firm behind many of the claims.

Phil Shiner, who ran PIL, has been struck off after being found to have acted dishonestly in bringing murder and torture claims against Iraq war veterans. The committee said it was “deeply concerned” the MoD had used public funds to cover the costs of those who were bringing “spurious and unassessed” cases against the war veterans, and about the lack of support for those accused.

IHAT investigators used “intimidatory tactics” which included “deeply disturbing” methods such as impersonating the police. The report found that serving and retired soldiers have also been spied on.

The damning report said the catalogue of serious failings in IHAT’s conduct pointed to a loss of control in its management.

It added: “Both the MoD and IHAT have focused too much on satisfying the accusers and too little on defending those under investigation.”

IHAT was set up by Labour in 2010 to assess claims of abuse by Iraqi civilians against troops who had served there.

It started out with 165 cases but the number allegations skyrocketed. Most were generated by two law firms, PIL and Leigh Day.

The report states: “It is clear to us that legal firms were empowered by the MoD’s approach to IHAT to generate cases against service personnel at an industrial level. The MoD cannot claim that it has been a victim of the industry; nor can it claim that it had no way of foreseeing the creation of this industry.”

The Government said it had not been able to shut down IHAT sooner because the conduct of the investigations is under scrutiny by the High Court and the International Criminal Court.

Fallon said: “It was the MoD that supplied the main evidence that got Phil Shiner struck off for making false allegations. Exposing his dishonesty means many more claims he made can now be thrown out and the beginning of the end for IHAT.

“This will be a relief for our soldiers who have had allegations hanging over them for too long.”