An Australian SAS soldier who cut the hands off two suspected Taliban fighters has been cleared of war crimes by a Federal Police investigation.

Key points: Incident occured in April 2013 in Afghanistan's Zabul province in joint operation with Afghan forces

Operation led to the killing of four suspected insurgents

SAS corporal proceeded to sever right hands of dead men with surgical scapel

The incident, first reported by the ABC in 2013, occurred during a combined operation between the Afghan national security service and Australian Special Operations Task Group soldiers in Zabul province in April 2013.

The joint operation was targeting a senior insurgent commander codenamed "Rapier" by the Australians.

The operation led to the killing of four suspected insurgents. Rapier, the target of the mission, was not killed or captured.

An SAS corporal searched the bodies of two of the suspected insurgents and, after finding a Makarov pistol on one, proceeded to sever the right hands of the dead men with a surgical scalpel.

Australian troops are required to collect fingerprints and eye scans of every Taliban fighter who is killed when it is possible to do so.

However, the mutilation of bodies is a violation of the laws of war.

The revelations led to a two-year Australian Federal Police (AFP) investigation into whether or not the soldier had committed a war crime, and opened divisions between the SAS and military investigators.

SAS corporal cut off hands 'due to time pressure'

In July this year the ABC published fresh details about the incident following a leak of hundreds of classified Defence documents from Australia's 16-year-long war in Afghanistan.

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One of the documents, a classified internal inquiry into the incident, describes the SAS corporal's reasons for severing the men's hands.

"In his evidence [the SAS corporal] said that once again he had severed the hands of the EKIA [enemy killed in action] 2 and EKIA 3 of his own volition, as there was time pressure to retrieve the biometric material and to get back to the helicopters for extraction," the report states.

"At this point in time patrol commander [a sergeant] … arrived at EKIA 3, and seeing the two hands on the ground, exclaimed words to the effect: 'What the f*** are you doing?'"

Federal MP Andrew Hastie, a former captain in the SAS, was the patrol commander of one of the groups of soldiers at the scene.

The leaked documents show Captain Hastie also observed one of the severed hands on the ground and asked what was going on.

When Captain Hastie and the sergeant returned to their base they discussed the incident at length and asked another SAS member to find out if the practice was permitted under Defence rules and regulations.

Captain Hastie told his men not to sever any more hands and the next day reported the incident to his commanding officer.

Defence probe looked into briefing given to SAS troopers

The internal Defence investigation into the hand chopping hinged on a briefing given to the SAS troopers by Australian Defence Force Investigative Service (ADFIS) experts in the days leading up to the incident.

SAS members claimed that in that briefing they were told it was acceptable to sever the hands of dead Taliban fighters for identification purposes — while the ADFIS members who gave the briefing vehemently denied this.

The Defence investigation also discovered that Australian troops deploying to Afghanistan had been given no advice about whether the collection of body parts for identification purposes was acceptable.

However, it said regardless of what information Australian troops had been given, the soldier who cut off the hands had "exercised poor judgment, in that he failed to adequately appreciate the possible strategic consequences of those actions, in particular the potential responses from local nationals, [the Afghan Government], the Australian public and the media."

The ABC also reported in August that the commanding officer of the SAS had complained by letter to the head of ADFIS that the investigation into the incident was being driven by political considerations.

"To be clear, I believe the ADFIS team were deliberately seeking to charge members of my team to prevent any adverse action on members of their own. This is a perception shared by persons outside my chain of command as well," the SAS officer wrote in October 2013.

Soldiers' views 'appeared to demonstrate a degree of desensitisation'

The Defence investigation found that even after SAS members were explicitly told not to sever any more hands, they were still asking if it was permissible in some circumstances.

"The above position could be attributed to a common desire by the members to support [the SAS trooper who severed the hands], following his employment of the technique," the report said.

"That type of support is not surprising considering the nature of the unit and its operations. However, the views expressed appeared to go beyond mere support for [him] and demonstrated a drift in values, or at least a degree of desensitisation."

Other more senior personnel who were interviewed by the inquiry were less ambivalent. Mr Hastie is quoted as saying: "My gut instinct was okay, that's a strange practice."

Another SAS member said: "There's no uncertainty. I wouldn't cut f***ing people's hands off, sir."

The inquiry officer said in conclusion he could not identify what had caused any "value shift" in the SAS members, but noted they regularly saw dead and dismembered bodies, and themselves regularly killed and injured people.

"The significance of [this] is that these members require very clear direction in relation to what they can and can't do, and the members request as much," he wrote.

"Additionally, it would be imprudent for commanders to assume that these members are in a position to make value judgements, in a way that will align with the judgement of the commanders, and others."

A spokesman for the AFP confirmed the matter had been referred back to the Defence Force.