The story first appeared in the "Daily Mirror" newspaper on 1 May, following similar reports involving American soldiers in Iraq. The newspaper published five photographs it says show British troops kicking, stomping, and urinating on an Iraqi prisoner, who is wearing a hood.
Britain has been a staunch ally of the U.S.-led occupation of Iraq, and has some 7,500 soldiers, mostly in the south of the country.
Blair said the allegations of abuse, if true, should not take away from the contributions British troops have made to help the Iraqi people.
"The allegations made against British troops, of course, have been extremely serious, and I've said already, that it should be fully investigated. I hope, though, that that does not detract from the work that is being done by thousands of British troops risking their lives in Iraq to make the country better, serving this country well, and doing things to the enormous benefit of a majority of the Iraqi people," Blair said.
Yesterday in parliament, Armed Forces Minister Adam Ingram said the unit in question -- the Queen's Lancashire Regiment -- is being investigated.
"It is not appropriate for ministers to interfere with police investigations,” he said. “I can assure the House [of Commons], however, that if British soldiers are found to have acted unlawfully, then appropriate action will be taken. But our immediate priority is to establish the truth as quickly as possible."
Ingram says the "Daily Mirror" has handed over some 20 photographs depicting the alleged abuse.
Some observers are questioning the authenticity of the photographs, however. The pictures are said to show military gear that has not been issued to British units serving in Iraq. The alleged Iraqi prisoner also is not shown reacting as would be expected if actually being subjected to such abuse.
Ben Fenton is a senior journalist at "The Daily Telegraph" newspaper. He says the photographs do strike him as suspicious.
"It is not so much those details in terms of shoelaces and SA-80 Mark I or Mark II [assault rifles] or those things, but merely the look of the pictures. They are far too professional-looking. They're far too staged and posed. They just don't look like the sort of album snap [shot] photographs that all of us who have any dealings with the armed forces around the world know that armed forces take for their own personal scrapbooks. That was why I, personally, and my colleagues here thought that there was something wrong with them," Fenton said.
Another newspaper, the "Daily Express," today attacked its rival in a front-page story that alleges the "Daily Mirror" told British soldiers their story would be worth a fortune if only they had pictures to prove it.
"Guess what?" the "Express" says. "They came back with the set-up photographs."
The "Daily Mirror" says it stands by its story, but wants to protect the identities of the British soldiers who brought them the story.
Fenton tells RFE/RL that, even if the photographs do turn out to be fake, it is impossible to undo the damage already been done to the reputation of the British Army.
"Whichever way it goes, it appears to me to be the sort of inquiry that will come up with an answer,” he says. “But I don't think what they will do is satisfy anyone, because on the one hand, they won't prove the innocence of the British Army to other allegations that are already separately in existence of brutality to prisoners. And if they were to prove to be genuine photographs, then I don't suppose that they would be really giving any additional evidence, because those people who have already decided that the British Army are capable of this kind of action have already made up their minds."
Hashem Ali is a representative of the Iraqi Community Association in London. He agrees with Fenton's conclusions.
"In armies, abuses happen. The British Army here in the U.K. sometimes commits abuses against new British recruits, so everything is possible. But again, we need to hear the opinion of the people who will investigate and see how much truth is in that. The damage has been done, really," Ali said.
Ali says lessons should be learned, whatever the outcome of the inquiry.
"Prisoners and their dignity are entitled to be respected. At least, that's the aim of coming to Iraq, crossing all these seas away from America and the U.K. So, people need, everyone needs, to respect human rights, no matter what is the rank of the people in prison or whatever the accusation," Ali said.
Meanwhile, Ingram, the British armed forces minister, also confirmed that separate allegations against eight British soldiers accused of abusing Iraqi prisoners a year ago are being "thoroughly investigated." But he added that the inquiry will take some time.