A Polish military spokesman refused to confirm whether there were firefights or how many Poles were holed up in the station.
The Warsaw-based PAP news agency citing military sources said 20 Polish soldiers were trapped by several hundred rebel fighters loyal to Shia leader Muqtada al-Sadr.
It said the two sides exchanged fire sporadically. There was no word on casualties.
However, the city's police chief said there were many dead on both sides.
According to Colonel Zdzislaw Gnatowski, the Polish soldiers, as well as a few dozen Iraqi police, had been encircled for several hours at their post at Hilla about 5km from their main base in Babylon.
Gnatowski said negotiations were underway between Iraqi forces and the rebels. "We want to find a peaceful issue to this situation at all costs," he said, adding that the Polish troops were not equipped to carry out offensive operations.
Polish General Andrzej Ekiert, commander of the multinational division headed by Poland, told state television here that the troops had been sent to reinforce the police, along with ammunition and supplies.
"To avoid losses, the soldiers will spend the night at the police post," he said.
He added that an attempt to evacuate the soldiers would be carried out on Saturday morning.
The violence erupted at about 3pm (1100 GMT) when fighters attacked police stations and the provincial government building, General Qais Hamzeh Aboud told AFP by telephone.
Explosions and gunfire could be heard in the background over the line.
"I am in the middle of the battle now," he said late on Friday,
putting the number of militiamen in the hundreds.
Three policemen were killed and another three wounded, said
Aboud, adding that between 30 and 40 rebels had also been killed.
He said the militia launched a surprise attack, after
initially saying they were leading a peaceful demonstration in the city.
This could not be confirmed by independent sources.