Hundreds of Mahdi Army members armed with assault rifles and rocket-propelled grenades took over several areas of Iraq's second-biggest city and set up checkpoints on the streets, witnesses said.

Bursts of gunfire and explosions echoed through the city.

The British military reported some exchanges of fire between soldiers and gunmen.

Witnesses said fighters were firing at British patrols and positions in several quarters of Basra. Some streets were largely deserted and many shops closed.

A British spokesman said he was aware of disturbances in Basra. Large crowds, including armed men, had gathered in the city centre near the headquarters of the South Oil Company, he said.

Another spokesman later said the situation was unclear, but British forces were avoiding aggravating the situation. Talks were under way with local leaders to ease the tension, he said.

Baquba blast

A bomb which exploded outside the home of an Iraqi police official has killed three people and wounded three others near the northern Iraqi town of Baquba.

Fighters also opened fire on the home of the mayor of a nearby town, wounding a policeman.

The bomb attack in the town of Habhab, 20km north of Baquba,  hit the home of a police non-commissioned officer, Muayyad Ayad, on Saturday. Two women and a male relative were killed, said Nasir Jawad, a doctor at Baquba hospital.

In the town of Muqdadiyah, 35km north of Baquba, three armed fighters opened fire on the house of the town mayor, sparking a gunbattle with his security guards. One policeman was wounded.

Baquba, 40km north of Baghdad, is in the heartland of anti-US resistance which has targeted American troops as well as Iraqis seen working with the US-led occupation.

Amara clashes

In Amara to the north, British forces stormed an office of al-Sadr's movement, triggering fierce gunbattles with his Mahdi Army members. At least three fighters were killed and eight wounded in the fighting, witnesses said.

A British military spokesman said two soldiers were slightly wounded.

Two US soldiers were killed in
the town of Amara a week ago

Mahdi Army members killed two US occupation soldiers and wounded at least three British soldiers in clashes in Amara a week ago.

Saturday's clashes came a day after an aide to al-Sadr in Basra offered rewards for the killing or capturing of British soldiers.

Al-Sadr and his followers, who rose up against the US-led occupation a month ago, are under increasing pressure in the holy city of Najaf, where US forces are vowing to detain the firebrand leader who is wanted for the killing of a rival Shia cleric.

Al-Sadr has denied any role in the murder. 

Polish soldier dead

Meanwhile, a Polish soldier was killed in a road accident in the central Iraqi town of Karbala on Saturday, Poland's third military casualty since it took control of part of the war-torn country last year.
 
"A Polish soldier died in a road accident in Kerbala," deputy defence minister Janusz Zemke told PAP news agency.

Public television TVP3 said from Iraq the soldier died after his vehicle had a head-on collision with a truck and rolled down an embankment in Karbala.

A further two soldiers injured in the accident are in hospital, TVP3 said, quoting the Polish military in Iraq.

Poland, a staunch supporter of the US-led invasion and occupation of Iraq, has about 2400 troops in the country and commands a multinational stabilisation force in south-central Iraq. It has a military base in Karbala.