The issue was raised when former Pakistani President Pervez Musharraf said in an interview he wasn't told that Britain opposed the use of torture to extract information from terror suspects and he considered that to be "tacit approval of whatever we were doing," the BBC reported.
Musharraf's comments raised questions about how much MI5, Britain's intelligence agency, knew about torture used to glean information from suspects in the fight against al-Qaida.
Former MI5 Director General Elizabeth Manningham-Buller denied "a blind eye had been turned."
Musharraf was president of Pakistan from 1999 until 2008. In an interview with the BBC Two program "The Secret War on Terror," he said, "We are dealing with vicious people and you have to get information."
"Now if you are extremely decent, we then don't get any information," Musharraf said on the program. "We need to allow leeway to the intelligence operatives, the people who interrogate."
Former appeals court Judge Peter Gibson will head the panel to examine the torture claims.
"We are not and have not been complicit in torture and I'm in no doubt that all the countries concerned, including Pakistan and the United States, were very well aware of what British policy was, which was we don't do this and we don't ask other people to do it," said David Omand, who was the United Kingdom's security and intelligence coordinator from 2002 to 2005.