British soldiers are being investigated over allegations they tortured and murdered a 62-year-old Iraqi grandmother.

The body of Sabiha Khudur Talib was found dumped by the roadside three years ago after her family home was raided by troops.

The Royal Military Police are now investigating claims from her relatives that she was led away by soldiers from the Princess of Wales’ Royal Regiment before being brutally tortured and shot.

It is one of the most serious charges levied against the British Army during its six-year occupation in southern Iraq.

Ministers are to be handed crime reports filed by Basra police that conclude Mrs Talib’s body was dumped by a roadside in a British bodybag in November 2006.

Injuries to her face were consistent with torture and she had been shot in the abdomen.

Lawyers for Mrs Talib’s family say their are preparing legal action in the High Court against the MOD.

Statements from relatives who were at home during the raid claim that they saw her being led away by British soldiers shortly before she died.

The MOD confirmed that Mrs Talib was shot by British soldiers from the Princess of Wales’ Royal Regiment in 2006 but deny she was murdered or tortured.

But an investigation led by Lieutenant Haidar Yashaa Salman from Al-Qibla police station of the Al-Hussein Police Directorate in Iraq concluded: ‘At 11 o’clock, we were informed by the police operation room of the finding of a dumped body, so went to the site and found out that the body belonged to the victim Sabiha Khudur Talib, who was arrested by the British forces on 14-15 November 2006 .

‘I saw the body in a brown dish- dash [one-piece tunic], bare feet and hands with marks of handcuffs.’

Phil Shiner, of Public Interest Lawyers, who is representing the family told The Independent: ‘The possibility that British forces in 2006 could have tortured and executed an innocent elderly woman should shock the nation.

‘Such an allegation must be immediately independently investigated as a possible murder.’