SAS morale has plunged amid fears heroes will be hounded through the courts after risking their lives for their country.
A report to MoD chiefs warns the Who Dares Wins troops are “confused” about how to tackle their enemies.
The author, a top ranking SAS veteran, said the threat of legal action will lead to “operational incoherence and ineffectiveness”.
The dossier, seen by The Sun, states: “If this situation remains unresolved, it is potentially terminal for UK Special Forces.”
It comes as SAS soldiers face multiple legal investigations into missions in Northern Ireland, Syria and Afghanistan.
George Simm, an ex-SAS Regimental Sergeant Major, wrote to defence chiefs in April claiming laws that guarantee the “Right to Life” were at odds with the Special Forces’ job to kill people.
He said: “The conveyor belt of soldiers being investigated for alleged crimes under the Human Rights Act has created conditions whereby those conducting military operations against the UK’s enemies are, at the very least, confused about what is acceptable operational behaviour.”
The seven-page dossier emerged after RSM Simm, 70, signed an open letter with SAS commanders that warned “there is no fair legal framework for counterterrorist operations”.
Defence chiefs hit back, insisting the Human Rights Act “does not prevent the UK from taking effective action to counter terrorism”.
A spokesman added: “It is right that our Armed Forces operate within the law.”
