United States forces in Iraq admit they mistakenly released a former Iraqi official suspected of killing thousands of Shi'ite Muslims after the 1991 Gulf war.

The BBC reports last month a mass grave though to contain as many as 15,000 bodies was uncovered in the town of Mahawil, south of Baghdad.

Mohammed Jawad al-Neifus is suspected of having been involved in the killings.

The US military has not explained why he was picked up in the first place but after three weeks in an internment camp in the southern town of Umm Qasr, he was freed.

» ABC News - US 'erroneously' releases suspected Iraqi war criminal