“Completely baseless” allegations that British soldiers murdered and tortured Iraqi detainees backed by a Birmingham law firm have been laid to rest once and for all, Defence Secretary Michael Fallon has insisted.

Mr Fallon told MPs the serious allegations made against troops in the Battle of Danny Boy and its aftermath in May 2004 were found to be “wholly without foundation and entirely the product of deliberate lies, reckless speculation and ingrained hostility”.

By July 2013, expert witnesses had demonstrated “unequivocally” that the Iraqis died as a result of wounds sustained in the fighting, Mr Fallon said.

He told MPs that if the concession had been made earlier than it was, it would not have been necessary for as many soldiers to give evidence, the inquiry could have been concluded and the bill to the taxpayer would have been smaller.

Mr Fallon expressed regret that nine Iraqi detainees were found to have been mistreated.

He said the cost of the long-running Al-Sweady inquiry was £31 million. Lawyers who represented Iraqi claimants denied defeat after the report accused key witnesses of lying in the “extremely serious” claims made about the British military.

Public Interest Lawyers (PIL) based in Hylton Street, Birmingham, said the £25 million action had been “legally necessary, morally justified and politically required”.

The firm admits to making £900,000 from the inquiry.

In a statement, the firm said: “Until the evidence was complete the families of the deceased had an understandable, genuine and sincere belief that mutilation, torture and murder of their loved ones had occurred. We are delighted that after this lengthy period of time the families of the deceased no longer have this cloud of uncertainty hanging over their heads and are able to find some resolution of their understandable need to discover how their loved ones died.

“We are also hopeful that the recommendations made by the inquiry will be adopted wholly by the MoD.”

Asked if the inquiry had represented a resounding defeat for the firm, lead solicitor John Dickinson said: “It would be a defeat if we were seeking to claim compensation, if we had been seeking to bring home a criminal conviction.

“The whole purpose of an inquiry is to inquire and we are content with the decisions and the conclusions reached.”