The US military has dropped all charges against one of the marines accused of involvement in the killing of Iraqi civilians in Haditha in November 2005.
L/Cpl Stephen Tatum, 26, was about to face a court martial on charges of involuntary manslaughter.
Prosecutors say that US marines indiscriminately killed 24 unarmed Iraqi civilians, including women and children, in the incident.
Five of the eight men initially accused have now had all charges dismissed.
Jack Zimmerman, a defence lawyer for L/Cpl Tatum, said in a statement: "It became clear to the experienced prosecution team that the right thing to do was to dismiss all charges.
"We believe the evidence shows that Lance Corporal Tatum reacted to an enemy attack the way he was trained to do."
L/Cpl Tatum had been about to face trial for two counts of involuntary manslaughter, of unarmed children, reckless endangerment and aggravated assault.
The dead in Haditha included women, children and elderly men
The Marine Corps said it was dropping all charges against him and granting full immunity "in order to continue to pursue the truth-seeking process into the Haditha incident".
The case stemmed from a roadside bombing in Haditha on 19 November 2005 which killed one marine, L/Cpl Miguel Terrazas, and injured two others.
The US military at first reported that the Iraqis had been killed by that explosion, or in a subsequent gunfight with insurgents.
But Iraqi witnesses said the US troops shot dead five unarmed men in a car when they approached the scene of the bombing in a taxi.
The troops were then accused of killing 19 other civilians in three houses nearby over the next few hours.
'No deal struck'
Despite the accusations, there was no full US investigation into what happened until January 2006, when video footage emerged of the aftermath, shot by a local human rights activist.
A subsequent investigation by Time magazine suggested that most of the dead were shot by marines after the bomb - and in March 2006 a criminal investigation was begun.
The following month, three officers in charge of troops in Haditha were stripped of their command and reassigned.
Those accused of involvement in the incident have maintained they were reacting to insurgent fire.
The investigator overseeing L/Cpl Tatum's pre-trial hearing had recommended the dropping of all charges on the grounds that he shot at the children because another marine, Staff Sgt Frank Wuterich, was already firing.
Sgt Wuterich faces a court martial on nine counts of voluntary manslaughter later this year.
L/Cpl Tatum's lawyer denied that a deal had been struck under which the marine would testify against Sgt Wuterich.
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