The closure of Iraq War law firm Public Interest Lawyers is "the right outcome for our armed forces", Defence Secretary Michael Fallon said.
The firm, which submitted hundreds of allegations of misconduct and unlawful killing by British troops, is to cease operation at the end of August, weeks after being stripped of legal aid funding.
PIL represented complainants in the £31 million Al-Sweady inquiry and was criticised when its 2014 report concluded that allegations of war crimes following a 2004 battle in southern Iraq were based on "deliberate lies, reckless speculation and ingrained hostility".
At the start of August it was announced the firm would no longer receive public funding after the Legal Aid Agency (LAA) ruled it had breached contractual requirements. It took the decision after reviewing information submitted by the firm, following a Solicitors Regulation Authority (SRA) investigation.
Mr Fallon said: "This is the right outcome for our armed forces, who show bravery and dedication in difficult circumstances.
"For too long, we've seen our legal system abused to impugn them falsely. We are now seeing progress and we will be announcing further measures to stamp out this practice."
An employee of the law firm who answered the intercom at its office in Birmingham's Jewellery Quarter said no one was available to speak to the media, instead referring inquiries to a press spokesman.
The long-running Al-Sweady inquiry concluded in its final report that the conduct of some soldiers towards detainees breached the Geneva convention.
But it was highly critical of the claims it was initially set up to investigate - that Iraqi detainees had been murdered, mutilated and tortured following the Battle of Danny Boy on May 14 2004 near Al Amarah in southern Iraq.
It found that British forces responded to a deadly ambush by insurgents with "exemplary courage, resolution and professionalism".
And it suggested that some of the detainees - all described as members or supporters of the Mahdi Army insurgent group - consciously lied about the most serious allegations to discredit the British armed forces.
Lawyers representing the alleged victims' families had already admitted during the public inquiry that there was no evidence of unlawful killing.
But they stood by claims that detainees were mistreated at Camp Abu Naji (CAN), near Majar-al-Kabir in southern Iraq, on the night of May 14/15, and later at Shaibah Logistics Base.
Prime Minister Theresa May was said to be "very much pleased" at the closure of the firm.
"We made a manifesto commitment to addressing these types of spurious claims that companies like PIL are pursuing," a No 10 spokesman said.
"The closure of PIL shows that we are making progress on that, tackling these types of firms head on to make sure we get the right outcome for our armed forces who show such bravery in the most difficult of circumstances."
The spokesman said ministers were currently looking at a "suite of measures" to prevent firms making "bogus" claims, including strengthening the penalties for those who abused the system.