Britain's military intelligence carried out a secret operation in Iraq under which its troops were authorised to torture prisoners, a media report said Sunday.

Fresh evidence has emerged that British military intelligence ran a secret operation in Iraq which authorised degrading and unlawful treatment of prisoners, The Independent reported.

Prisoners were kept hooded for long periods in intense heat and deprived of sleep by the intelligence officers who were answerable only 'directly to London', the report said citing documents.

The documents emerged during an inquiry into Baha Mousa, an Iraqi hotel worker beaten to death while in custody of British troops in September 2003.

The inquiry is looking into how interrogation techniques banned by the government in 1972 and considered as torture and degrading treatment were used in Iraq.

Lawyers believe the new evidence supports suspicions that the intelligence unit Joint Forward Interrogation Team (JFIT), which operated in Iraq, used illegal 'coercive techniques' and was not answerable to military commanders in Iraq.

Colonel Christopher Vernon told the inquiry that he raised concerns after seeing 30 to 40 prisoners in a kneeling position with sacks over their heads.

He said he was informed that 'they were an independent unit and reported directly to their chain of command in London'. Hooding was 'accepted practice' and would continue, he was told.

Colonel David Frend, a British Army legal adviser in Iraq, said in a statement he was told by a senior military intelligence officer in London that 'there was a legitimate reason for it (hooding), they had always done it and they would like to continue to do it'.

A defence ministry spokesman declined to comment while the inquiry was ongoing, the daily said.