A discredited £60 million government probe into allegations against Iraq war veterans has been an "unmitigated failure" and must be shut down within months, according to a scathing report by MPs.
The Iraq Historic Allegations Team (Ihat) has become a "seemingly unstoppable self-perpetuating machine" that has "proved to be deaf to the concerns of the Armed Forces, blind to their needs, and profligate with its own resources", the Defence committee said.
Exploitation by law firms saw the case load hit more than 3,500, despite many having no credible evidence, and not one prosecution has been secured, it said.
War veterans have been subjected to "deeply disturbing" treatment and the explosion of so-called lawfare has "directly harmed" UK defences, the inquiry led by a former army captain found.
The committee called for the investigation team to be shut down within months, a recommendation the Government is expected to carry out.
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 that 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.
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", including "deeply disturbing" methods such as impersonating the police. Serving and retired soldiers have also been spied on, the report found.
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."
The Defence subcommittee inquiry, chaired by Conservative MP Johnny Mercer, found there had been an "almost total disregard" for the welfare of troops and veterans, who had been treated in an "unacceptable manner as a result of serving the United Kingdom".
He said: "Throughout this process there has been an almost total disregard of the welfare of soldiers and their families. We need to hold our people in the highest esteem and a repeat of IHAT must never be allowed to happen again.
"The MoD must take responsibility for allowing this to happen. They could have discriminated between credible and non-credible cases yet they lacked the will to do so. They need to get on and immediately dismiss those remaining cases that are based on obviously weak evidence."
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 allegations rocketed. Most were generated by two law firms, PIL and Leigh Day.
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 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."
MPs were told that the war veterans had been "hung out to dry", with one becoming a recluse, because there had been a lack of military support.
They criticised the MoD for refusing to allow Iraq veterans to give evidence to the committee.
"While the cost to the taxpayer is significant, the psychological and actual cost to individual soldiers is arguably greater," the report states.
"Their lives have been put on hold and their careers damaged, sometimes for years, because of allegations made against them - in many cases without any credible supporting evidence. The effects of this on the British military are profound and enduring."