Three British soldiers have been arrested in connection with a videoed assault on Iraqi protesters two years ago, the Ministry of Defence said tonight.

One of the soldiers, thought to be a corporal accused of providing the voiceover for the graphic video, was arrested by the Royal Military Police in Britain yesterday. The other two soldiers were arrested today.

News of the arrests came after the provincial authorities in the southern Iraqi city of Basra, where most of the UK's 8,000 Iraq contingent is based, suspended relations with the British Army. At least two Iraqis are threatening to sue the British army over injuries they say they received in a beating captured on video during a 2004 demonstration.

The Ministry of Defence would give no details on the identity of those arrested but The Times reported today that several soldiers from the 1st Battalion The Light Infantry were being interrogated last night at their barracks at Paderborn, Germany, over the assault in a British military compound at Amarah.

The video, which was passed to the News of the World, shows several Iraqi youths being punched, beaten with batons and kicked by British soldiers in al-Amarah, a city in Maysan province, after young men queuing for jobs in the security forces started to riot. It is not clear if officials in Maysan, which borders Basra province to the north, will take similar action.

"I was one of 250 unemployed people demonstrating in the street in 2004, but when we reached the governor’s office we were surprised by the presence of the British forces," Bassem Shaker, 27, told the Associated Press. "We started throwing stones at them because we believed that they were behind all our misery."

At the time of the protest on January 10, 2004 protest, the British military said shots were heard coming from among hundreds of protesters who had gathered in front of the office of the U.S.-led coalition to demand jobs, and that Iraqi police, thinking they were under attack, opened fire.

Witnesses and officials said that British troops and Iraqi police had fired at armed, stone-throwing protesters, killing six people and wounding 11. British soldiers from the 1st Battalion of the Light Infantry, which was based in al-Amarah at the time, were seen moving in with armoured vehicles to support the police, according to witness reports at the time. Assailants in the crowd lobbed three explosive devices at them, believed to be hand grenades, the British military reported later that day.

Speaking at the office of Moqtada al-Sadr, the firebrand Shia cleric, Mr Shaker said that British troops fired volleys of rubber bullets at the protesters in a bid to disperse them.

"Then a group of British soldiers rushed out from their base and arrested nine of us, dragging us for about 30 metres to the governor's office," Mr Shaker alleged. "They were beating us with fists and batons and were kicking us. Then they cuffed our hands and also dragged us to their base, which is about 15 metres from the governor’s office, where they also beat us and frightened us with dogs before releasing us before sunset."

Mr Shaker said that he did not report the abuse initially because he did not believe any officials would deal with their complaints because they involved British troops.

"But when we saw this tape and the amount of anger it caused inside and outside Iraq, we decided to come today to the al-Sadr office because we need them, after God, to help us to sue the British forces and compensate us," he said. "Those troops humiliated us and violated our rights to demand jobs."

One of Al-Sadr's aides said that both Mr Shaker and 14-year-old Tariq Abdul-Razzak both claimed they had been beaten and requested help to sue the British military and seek compensation. Mr Al-Sadr has strong support throughout southern Iraq and has been demanding the withdrawal of coalition forces throughout the country.

Captain James St. John-Price, an Army spokesman, said that the British wanted to conduct a thorough investigation into the abuse allegations, but it was not immediately clear if they would try to interview those purporting to be victims.

Captain St. John-Price, based in Basra, also said that provincial authorities there had severed contacts with the British, but he was unsure whether that was included only the military or diplomatic and economic ties with Britain or whether joint patrols with Iraqi police, which are controlled by the national government, would continue.

British-Iraqi relations in Basra have suffered in recent weeks amid protests over the arrests of local policemen linked to militia-related killings and kidnappings and British security control over Basra International Airport.

The Ministry of Defence said that Royal Military Police investigators were still trying to identify all personnel involved in the video, which was "its top priority".

"We condemn all acts of abuse and brutality and have always treated any allegations of wrongdoing brought to our attention extremely seriously," the MoD said.

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