Evidence that the British army subjected prisoners in Northern Ireland to waterboarding during interrogations in the 1970s is emerging after one of the alleged victims launched an appeal against his conviction for murder.

Liam Holden became the last person in the United Kingdom to be sentenced to hang after being convicted in 1973 of the murder of a soldier, largely on the basis of an unsigned confession. His death sentence was commuted to life imprisonment and he spent 17 years behind bars.

The jury did not believe Holden's insistence that he made the confession only because he had been held down by members of the Parachute Regiment, whom he says placed a towel over his face before pouring water from a bucket over his nose and mouth, giving him the impression that he was drowning.

But now the Criminal Cases Review Commission (CCRC) has referred Holden's case to the court of appeal in Belfast after unearthing new evidence, and because of doubts about "the admissibility and reliability" of his confession. The commission says it believes "there is a real possibility" his conviction will be quashed. After a preliminary hearing earlier this month, Holden's appeal was adjourned to the new year.

However, the account that Holden gave at his trial is remarkably similar to those that have emerged since the CIA began using waterboarding techniques while interrogating al-Qaida suspects during the so-called war on terror.

Lawyers who have taken up his case have identified a second man who gave a similar account of being waterboarded after being arrested by detectives of the Royal Ulster Constabulary and questioned about the murder of a police constable. In a statement to a doctor in April 1978, this man said officers had put a towel over his face and poured water over his nose and mouth, and that "this was frightening and was repeated on a number of occasions". He was eventually released without charge. The CCRC also has a statement taken from a third man who says he was waterboarded by the British army in the early 70s.

All of the allegations of waterboarding come from a period after March 1972, when the then prime minister, Ted Heath, banned five other notorious torture methods which were subsequently condemned by the European court of human rights as being inhuman and degrading.

Holden, a Roman Catholic, was 19 and a chef when he was detained during a raid by soldiers of the Parachute Regiment on his parents' home in the Ballymurphy area of west Belfast in October 1972. Apparently acting on a tipoff from an informer, the soldiers accused Holden of being the sniper who, a month earlier, had shot dead Private Frank Bell of the regiment's 2nd Battalion. Bell had just turned 18 and had joined the regiment six weeks earlier. He was the 100th British soldier to die in Northern Ireland that year.

When Holden came to trial in April 1973 he told the jury he had been playing cards with his brother and two friends in a public place at the time Bell was shot. He said that after being arrested in his bed the soldiers had taken him to their base on Black Mountain, west of Belfast, where he was beaten, burned with a cigarette lighter, hooded and threatened with execution.

Holden also gave a detailed account of being waterboarded, although he did not use that term. In a court report published the following day, the Belfast Telegraph said the defendant told the jury that he had been pushed into a cubicle where he was held down by six men, that a towel was placed over his head, and that water was then poured slowly over his face from a bucket. "It nearly put me unconscious," Holden was quoted as saying. "It nearly drowned me and stopped me from breathing. This went on for a minute." A short while later he was subjected to the same treatment again, he said.

A sergeant from the Parachute Regiment and a British army captain told the court that Holden had confessed to the shooting during an "interview". The unnamed sergeant said Holden had wanted to confess to the murder because "he wanted to get it off his chest", while the officer said the teenager had told him that he had left the IRA a short while later because he felt such remorse.

The jury took less than 75 minutes to convict Holden of capital murder, and the judge, Sir Robert Lowry, told him: "The sentence of the court is that you will suffer death in the manner authorised by law." The then Northern Ireland secretary, William Whitelaw, commuted the sentence the following month, and the death penalty was abolished in Northern Ireland shortly afterwards. Holden did not appeal, however, with relatives saying at the time that he believed his trial had been "rigged" and a "farce".

He was eventually released from prison in 1989.

Holden's solicitor, Patricia Coyle, said: "At trial Mr Holden gave compelling evidence that the alleged confession was obtained by the army using water torture. He spent 17 years in jail. He is looking forward to the court hearing his appeal."

The new evidence that the CCRC has submitted to the court of appeal is being kept secret. The CCRC is unwilling to discuss this material, other than to say that it has not yet been disclosed at the request of the public body from which it was obtained. Holden's lawyers are now asking for it to be disclosed.

The Ministry of Defence said it was unable to confirm whether British service personnel had received instruction in waterboarding techniques as part of their counterinterrogation training at that time, and it would not disclose whether personnel currently receive such instruction "for reasons of operational security".

There is evidence that such instruction has been given, however. In 2005 Rod Richard, the former Welsh Office minister, told a Welsh newspaper that he had been waterboarded during his counterinterrogation training as a Royal Marines officer in the late 60s.

The Guardian has spoken to a former Royal Marines officer who says that he and his fellow officers and their men were all waterboarded at the end of their escape and evasion training at Lympstone, Devon, in the late 60s and early 70s. "You were tied to a chair and they would tip you over on your back, put a towel over your face and pour water over you. I can't recall what we called it – not waterboarding – but it produced a drowning sensation and it was pretty unpleasant."

Seven months before Holden was detained by British soldiers, the Heath government had publicly repudiated and banned five "interrogation techniques". RUC officers had learned the techniques – hooding, sleep deprivation, starvation and the use of stress positions and noise – from British military intelligence officers, but Heath assured the Commons that they "will not be used in future as an aid to interrogation".

There were subsequently unconfirmed allegations that the British army had experimented with other methods of torture, including electric shocks, and the use of drugs. Towards the end of the decade, Amnesty International was reporting that terrorism suspects were again being mistreated, this time by RUC detectives, "with sufficient frequency to warrant the establishment of a public inquiry".

A number of Republican former prisoners have told the Guardian that waterboarding was used as a form of punishment, as well as a means of extracting confessions.