The former SAS soldier standing as the Liberal Party's prize recruit in a key federal by-election was the officer in command of a troop being investigated for chopping the hands off dead Taliban fighters in Afghanistan.

Fairfax Media has learnt that the 2013 incident was carried out by one or more soldiers who were under the command of Captain Andrew Hastie, 32, who has been pre-selected as the Liberal candidate for the byelection in the West Australian seat of Canning.

Prime Minister Tony Abbott with Liberal candidate Captain Andrew Hastie outside the West Australian newspaper offices in Perth on Friday. Credit:Thomas Davidson

The hands of three Taliban fighters who had been killed in combat by the SAS soldiers were believed to have been removed for the purposes of identifying them by fingerprinting, sparking a defence investigation that has lasted more than two years and is still going on.

There are differing views on whether this constituted a breach of the rules of war, which forbid despoiling or mutilating corpses.