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This Snopes article says it's real, citing this Telegraph article (archived version) that features another photo of the same troops. What's weird is that the articles tell slightly different stories. The Snopes article says the original photograph's caption describes it as a Christmas charity performance, while the Telegraph article says they were doing a drag show to entertain themselves. Still, the photos seem to be real.
edit: not even a minute late, but still late :c
Drag is a Christmas event for some reason in the UK (pantomime). It's not even that modern either, it's been done for hundreds of years. It could be that both statements were true; a charity event that was also entertainment.