Former corporal Donald Payne told the public inquiry into Mr Mousa's death he witnessed Lieutenant Craig Rodgers pretending to set a young detainee alight.

He also claimed that he saw every member of the unit commanded by Lt Rodgers, known by the call sign G10A, "forcefully kick and/or punch" the group of Iraqi prisoners that included Mr Mousa.

Hotel receptionist Mr Mousa, 26, died in Basra, southern Iraq, on September 15 2003 while in the custody of the former Queen's Lancashire Regiment (QLR) having suffered 93 separate injuries.

Payne, a former QLR provost corporal, became the first member of the UK armed forces to be convicted of a war crime when he pleaded guilty at a court martial to inhumanely treating civilians.

He told the inquiry he had until now covered up the extent of the abuse of Iraqis by British soldiers out of "misguided loyalty".

He said "I now disclose that in adopting the routine I did each time I returned to the temporary detention facility to ensure the detainees were awake, the degree of force I applied was greater than I have so far admitted.

"Moreover at one time or another I saw all the members of the multiple in call sign G10A emulate me.

"I have seen each one, including Lt Rodgers, forcefully kick and/or punch the detainees in the period between September 14 and 16 2003.

"Further, during the morning of Monday September 15, I observed Lieutenant Rodgers place a jerry can of petrol in front of the young boy.

"He poured water over him and then lit a match. This took place in the middle room. Another member of the multiple was with Lt Rodgers but I do not now recall his identity."

Mr Rodgers, who left the Army in March 2007 having reached the rank of captain, strongly denied allegations of prisoner abuse when he gave evidence to the inquiry last week.

He said: "I did not hit, punch, kick or physically assault any of the detainees at any time."

Witnesses have told the inquiry they previously lied to protect Payne by saying the Iraqi prisoner accidentally banged his head during a scuffle.

Ex-QLR private Aaron Cooper gave an account for the first time last week of how Payne allegedly violently assaulted Mr Mousa just before he died.

He said in a statement to the inquiry: "He seemed to completely lose his self-control. He started to lash out wildly, punching and kicking Baha Mousa's ribs.

"Corporal Payne also certainly kicked Baha Mousa's head, which rebounded off the wall. It was the right side of his head as his body was facing the doorway.

"He also grabbed Baha Mousa's head and banged it hard against the wall."

The public inquiry sitting in central London has been told that British soldiers in Iraq used "conditioning" methods - such as hooding, sleep deprivation and making suspects stand in painful stress positions - banned by the Government in 1972.

It was played a short video showing Payne screaming obscenities at Mr Mousa and other hooded Iraqi prisoners and calling them "apes".

The inquiry has also heard that the former non-commissioned officer subjected the Iraqi detainees to other abuse, including making them scream in an "orchestrated choir".

Payne, who was cleared of charges of manslaughter and perverting the course of justice, was dismissed from the Army and sentenced to one year in a civilian jail after pleading guilty to inhumane treatment in September 2006.

At the time his lawyer described him as a "sacrificial lamb" and alleged that other troops were also responsible for the abuse.

Six other soldiers who faced the court martial were cleared on all counts in March 2007.