The Government has been urged to take action to regulate the activities of British mercenaries operating in Iraq and other trouble spots around the world.
A report by the charity War on Want says that private military and security companies (PMSCs) have grown "exponentially" in the aftermath of the invasion of Iraq.
Some PMSC personnel have been involved in the prisoner-abuse scandal at Abu Ghraib amid reports of others firing on Iraqi civilians. But the Government has still to take any action four years after the Foreign Office published a green paper on regulating PMSCs.
According to evidence presented to the US Congress, there are an estimated 48,000 PMSC staff currently in Iraq - six times the number of British troops - many working for UK companies. War on Want said that Iraqi contracts have increased the money spent on British PMSCs from £320 million in 2003 to more than £1.8 billion in 2004
They were increasingly operating alongside US and British forces, but there was no effective means of holding them to account for their actions.
"In a conflict environment like Iraq, the distinction between combat and combat support breaks down. There is often no perceptible difference between regular soldiers and their private support workers involved in protecting convoys or materials," the report said.
"The potential for human rights abuses in such situations in an ever-present threat, and it is nearly impossible to hold PMSC employees to account for their actions."
The report said that the Government should now legislate to outlaw PMSC involvement in any form of direct combat or combat support.
War on Want campaigns director John Hilary said: "The occupation of Iraq has allowed British mercenaries to reap huge profits. But the Government has failed to enact laws to punish their human rights abuses, including firing on Iraqi civilians.
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"How can Tony Blair hope to restore peace and security in Iraq while allowing mercenary armies to operate completely outside the law?"
