Britain is investigating reports that its soldiers mutilated the bodies of Iraqi civilians after a vicious gun battle last month, the Defence Ministry said.
A ministry spokeswoman said Britain "categorically denied" British soldiers had abused the bodies after the firefight near the southern Iraqi town of Majar-al-Kabir on May 14.
"We are investigating evidence that has been given to us and should the outcome of that require it, we will commence a formal investigation into the incident, but at the moment we have no reason to believe that that's the case," she added.
The Sunday Telegraphnewspaper said an Iraqi judge had ordered that some of the bodies be exhumed for further examination after families of the dead lodged formal complaints.
It said Iraqi doctors who examined the bodies said they had seen injuries including mutilated genitals, gouged eyes and severed hands and had called for an independent examination of forensic evidence.
The ministry said earlier this week that a complaint had been received from the International Committee of the Red Cross about the treatment of prisoners captured after the same battle, which it was also investigating.
Britain has said 14 Iraqis died in the battle after a patrol was attacked by followers of Shi'ite cleric Moqtada al-Sadr.
Iraqi officials put the figure at 20, the paper said.
It is investigating a total of 75 instances of deaths or injury to Iraqi civilians involving its forces since the beginning of the invasion of Iraq last year.
On Monday, the attorney general announced Britain would prosecute four soldiers for assault and indecent assault for sexually abusing Iraqi prisoners.