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The band worked on 'Innocent Civilians' during the experimental, electronica-only sessions in early 2000, that also yielded early incarnations of two other songs, that would end up on Hail To The Thief: 'Backdrifts' and 'The Gloaming'. Apparently, the version recorded then included sound effects that simulated the marching of troops, which perfectly fits the lyrics, but ultimately wasn't an idea they deemed worthy of keeping.
An early version of 'Sit Down. Stand Up.' might have been around during the Kid A sessions, since a bit of Thom's writing that puts the phrase "innocent civilians" next to lyrics that would end up in 'Sit Down. Stand Up.' could be found in the late 1999/early 2000 version of in a page titled 'collaterally damaged'. It appeared in two designs:

Stand up. Sit down. We can
wipe you out anytime . Gentleman's agreement
among civilised men innocent civilians
a terrible shame
walk into the jaws of hell walk into the jaws of hell walk into the jaws of hell


stand up.
sit down.
we can
wipe you out
anytime . gentleman's agreement
among civilised men innocent civilians

a terrible shame
walk into the jaws of hell walk into the jaws of hell walk into the jaws of hell


Ed mentions the song twice in his online diary, as part of a kind of joke by the band, where they pretended to have lost the master tapes of one of their best new songs, successfully puzzling the media and fans. They were slightly irritated by how closely people were following Ed's diary, especially the music press, and decided to have a bit of fun... In reality, however, they weren't too fond at all of the way the song sounded back then. Therefore, when around the same time Thom describes the song as a "sweeping ballad", that remark surely has to be seen in the light of the whole attempt to mislead people:
monday, february 7th 2000
monday morning and everyone arrives looking completely fucked. got one more week before we take a week off to recharge. nigel wants to mix 'dollars and cents' now that there are strings on it. he goes upstairs to work on it. downstairs work continues on thom and jonny's drum thing from last week. late night worries and weird symbiosis going on. go on message board and someone asks us about 'innocents civilian'. so once we get off the web we decide to put up the master tape of it. can't find it anywhere which is incredibly strange. it's got to turn up.
tuesday, february 8th 2000
nigel got what seems like a good mix of 'dollars and cents'. more work on t+j's drum thing. did some playing this afternoon. upstairs at the moment nigel and thom are doing 'something' to kinetic. still can't find the master tapes to 'innocents civilian' and beginning to worry. worst case scenarios even being aired ie the u2 case when some of their rehearsal tapes went missing and ended up being sold as bootlegs.cozzie continues editing drums.

Note that the spelling of the title has changed to 'Innocents Civilian'. A possible explanation is, that Ed simply made a typo in the first entry, and the band then decided to keep it, as they didn't think too much of the song anyway.
Ed O’Brien: “We had this thing at the beginning of the year, and Jonny apparently didn't enjoy these two weeks, but Nigel said like 'Alright, let's split up into two groups'. And we had two weeks of sort of workshop experimental stuff. Nigel said the rules were nobody was allowed to play drums, nobody was allowed to pick up a guitar, the only thing that could be used were sort of electronic, you know, computers, synths, etcetera, etcetera. And it was really good fun. Twenty percent of it was good and the other eighty percent of it was utter rubbish.” [...]

Paul Anderson: “Was much of it used, from that, those experimental stages?”

Ed: “Bits... I mean, there's one track that's possibly going... that will come out next year. No, but not a lot. I mean, there was like stupid stuff at midnight. There's a track that we nicknamed 'Innocents Civilian' that has us trawling around on the gravel outside.”
As pointed out above, there are some indications that gave rise to the theory that 'Innocent Civilians' is actually the working title for 'Sit Down. Stand Up.', which was around during the Kid A sessions already, and in fact everything that's known about 'Innocent Civilians' would fit with that scenario. However, there's a setlist from the august 7th 2002 concert in Salamanca, which makes such a connection highly unlikely. The band planned a section for the middle of the concert, where they would take requests from the audience, which in this way hadn't happened before and never since (rarely one song could be requested, but never a whole bunch). They didn't know what the fans would ask for, but nonetheless put a placeholder in the setlist, perhaps fearing the worst: 'Innocent Civilian' (no plural anymore). They probably reckoned that people would still be very intrigued by the whole media game Radiohead had played around this song, which was only two years in the past at the time of this concert:

This setlist could be seen either way: that 'Innocent Civilian(s)' is another song that has nothing to do with 'Sit Down. Stand Up.' as both songs appear on the same setlist, or that this is just a placeholder symbolic for all the mystery songs the fans might be asking for. In the latter case they would probably have cleared up that this song is actually 'Sit Down. Stand Up.' had someone asked for it. But since this didn't happen the riddle still isn't quite solved.