The US Navy is initiating dismissal proceedings against two Marines from a squad that killed 24 unarmed Iraqi civilians in 2005.

A US Marine at the centre of the biggest prosecution of US troops in the Iraq war should be tried for the lesser offence of negligent homicide instead of murder, an investigating officer said.

Military prosecutors have granted immunity to at least seven US Marines who may be called to testify at the trial of fellow troops accused over the killing of 24 Iraqi civilians in Haditha.

A US Marine Corps squad leader has been charged with murdering 12 people and ordering other Marines under his command to kill six people during an incident that left 24 civilians dead in the Iraqi town of Haditha last year.