Labour has received tens of thousands of pounds in donations from one of the law firms criticised over false claims British soldiers were involved in torture and murder in Iraq.

Leigh Day and Co gave the party or its MPs a total of £33,000 over two years, official records show.

The law firm was criticised on Wednesday after the £31million Al-Sweady inquiry found the shocking allegations were ‘wholly and entirely without merit’ and based on ‘deliberate and calculated lies’.

Scroll down for video

Labour leader Ed Miliband has been urged to give all money donated by Leigh Day and Co - criticised by the Al-Sweady inquiry - to armed forces charities

Yesterday former defence minister Sir Nicholas Soames, wrote to Labour leader Ed Miliband calling on him to donate the same sum of money to charity for wounded military personnel.

In the letter, the Tory grandee described the legal action as ‘vexatious and malicious’.

Sir Nicholas added: ‘It says everything about today’s Labour Party that – rather than supporting our troops – they take donations from those who seek to undermine them.

‘Ed Miliband needs to forfeit this money immediately. Otherwise people will conclude that he is a weak leader and utterly unfit to be Prime Minister.’

Labour said it would be inappropriate to comment while an investigation by the legal watchdog, the Solicitors Regulation Authority, into the conduct of some of the lawyers, was still ongoing.

Official records show Leigh Day & Co gave £14,500 to Emily Thornberry which was declared in her register of interests on December 8.

Miss Thornberry was a senior ally of Mr Miliband’s and the shadow Attorney General until she resigned over a ‘sneering’ row after posting on Twitter a picture of a house with a white van outside during the Rochdale by-election.

The donation was to pay for a legal research assistant for Miss Thornberry’s office.

Detained Iraqis being guarded by a British soldier that was shown at the The Al-Sweady Inquiry. The long-running inquiry found that British troops mistreated nine Iraqi detainees following a fierce battle a decade ago, but false allegations of murder and torture were the product of 'deliberate lies'

Electoral Commission figures also show the firm gave £18,250 to pay for Labour Party staff costs in January 2012. Another £875 was given for the same purpose six months later.

Sir Nicholas said Mr Miliband should make a ‘suitable financial donation’ to the work of Help for Heroes ‘as an acknowledgment of previous poor judgment’.

In the letter he wrote: ‘This would be the simplest way for you to clarify whether Labour are on the side of those who defend our country and our freedom or those who seek to undermine it.’

Sir Nicholas Soames said Labour should give all money received from Leigh Day and Co - criticised by the Al-Sweady inquiry - to armed forces charities

Another firm criticised after the inquiry was Public Interest Lawyers, which is led by Phil Shiner. In 2005, he shared a platform at a meeting about ‘alleged abuses in Iraq’ with Labour MP Sadiq Khan, who is now the shadow justice secretary.

The meeting in the House of Commons was held to discuss ‘all cases of alleged torture, abuse or ill treatment by UK armed forces in Iraq’.

On Wednesday the Al-Sweady probe exonerated British troops, saying the Iraqi men they were accused of torturing were not innocent farmers but insurgents killed or captured during a firefight, The Battle of Danny Boy, in 2004.

Ministers reacted with fury to the conclusions, with Defence Secretary Michael Fallon saying the claims were a ‘shameful attempt to use our legal system to attack and falsely impugn our armed forces’.

A Labour spokesman said: ‘As Shadow Defence Secretary Vernon Coaker made clear Labour supported the conclusion of the Al-Sweady inquiry which found that serious allegations made against British service personnel were wholly without foundation and that the failure of legal representatives to disclose evidence gave significant cause for concern.

‘The Solicitor Regulation Authority is now fully investigating whether there have been possible breaches of professional standards by the legal firms involved.

‘It would be completely inappropriate for us to comment further until this inquiry is complete.’

After the inquiry Leigh Day said it was ‘not responsible for representing the Iraqis at the Inquiry and were not asked by the Inquiry to disclose all relevant documents in our possession until August 2013.

‘The Arabic document detailing the detainees association with the militia “remained in our files until it was handed to the inquiry in September 2013 following a request from the team”.