Lance Corporals Michael White and Anthony Creswick bought pistols and ammunition on the Iraqi black market while on a tour of duty with the 3rd Battalion The Yorkshire Regiment, the court heard. The weapons were then smuggled to Osnabrück in Germany, where the soldiers hoped to sell them on.

The court martial, sitting at Catterick Garrison in North Yorkshire, was told that L/Cpl White and L/Cpl Creswick even produced a catalogue with photographs and details of the weapons they intended to "tout" around their unit.

It also heard that one soldier, Corporal Darren Clemie, offered them 30g of cocaine for two pistols, which L/Cpl White and L/Cpl Creswick subdivided into 1g wraps and intended to sell to other soldiers for a profit. Nigel Jones, prosecuting, told the hearing that L/Cpl White and L/Cpl Creswick sold four pistols between May and July 2005.

L/Cpl White has admitted charges relating to the buying and selling of weapons and ammunition and supplying cocaine. He will be called as the main prosecution witness, the court was told.

Mr Jones said the plan collapsed when other soldiers discovered that the guns were being sold, and arrests followed.

The court was told that although L/Cpl Creswick led police to the weapons, in interviews he said he was looking after them for a friend. Cpl Clemie denied any involvement.

L/Cpl Creswick denies three charges of selling a prohibited weapon and supplying a controlled drug. He admits unlawful possession of ammunition and possession of a prohibited weapon. Cpl Clemie denies possession of a prohibited weapon, ammunition and supplying a controlled drug.

A third soldier, Sergeant James Malone, denies a single charge of possessing three hand grenades. The hearing continues.