Metropolitan Police said on Tuesday they had charged Kevin Williams, 21, with murder. It is the first arrest of a British soldier for allegedly killing an Iraqi.
The arrest comes after the UK attorney general, Lord Goldsmith, ordered civilian police to investigate the death of Iraqi Hassan Said, who died in Dayr, in August last year.
A Metropolitan Police spokesman said Williams would appear at Bow Street Magistrates Court later on Tuesday, charged with murder, after an investigation by the Homicide Command.
The Ministry of Defence told Aljazeera.net: "All we can do at this stage is confirm that Williams has been charged with offences to operational incidents in Iraq."
Britain's military has launched 131 investigations into deaths and injuries of Iraqis, in incidents ranging from combat to detentions to road accidents. Seven cases cover detainees who died in custody.
The attorney general announced in June that four soldiers would be charged in military courts with sexually abusing detainees.