British military officials said they would return to al-Amara if Iraqi troops do not maintain security against attacks by armed groups.
British forces, who withdrew two months ago because of daily mortar attacks, were poised to re-enter the southern Iraqi community after armed groups stormed several Iraqi police stations.
In Washington, meanwhile, George Bush, the US president, administration leaders and US military commanders in Iraq met on Saturday to discuss the Iraqi situation.
Administration officials said the meeting was a previously scheduled one and not called in response to increasing violence in Iraq and eroding support in the US for the war.
In Baghdad, an Iraqi security adviser said Iraqi forces trying to strengthen security there were poorly funded, ill-trained and lacked military equipment.
The adviser's remarks followed a US official saying attacks in Baghdad had increased by 22 per cent in October, two months after a joint US-Iraqi security operation began, The Times of London said.
Troops deployed to quell trouble on the streets of al-Amara on Saturday as the uneasy balance of power between Iraq's security forces and armed Shia groups threatened to break down in violence.
British troops said they would
return to al-Amara
Government negotiators managed to broker a ceasefire in this southern city, restoring order after two days of bloodshed, but more clashes erupted further north as informal gangs of gunmen tested the government's resolve.
"The Iraqi army is on the main streets and intersections," said Shirwan al-Waili, Iraq's minister of state for national security, who rushed to al-Amara on Friday on the orders of Nuri al-Maliki, the Iraqi prime minister.
"The police are back in their barracks and there are no militias on the streets," he told reporters in the city.
Dozens of casualties
Zamil al-Oreibi, the medical director of al-Amara's health department, said that a total of 24 people had been killed in the fighting and 150 wounded, a mixture of police, fighters and civilian bystanders.
Armed fighters left the streets overnight, troops deployed in numbers and life was slowly returning to normal in this overwhelmingly Shia city of around 350,000 people.
Clashes erupted on Thursday after police arrested a member of radical cleric Moqtada al-Sadr's Mahdi Army and accused him of planting a bomb which killed a senior intelligence officer.
Relations had been tense between the group and the police force, which is widely understood to be infiltrated by supporters of a rival Shia movement.
Negotiating a ceasefire
On Friday, al-Sadr - who of late has appeared to be trying to find a political rather than a military path to power - quickly called on his supporters to stand down and sent aides to the city to negotiate a ceasefire.
"The committee of Moqtada al-Sadr had a prominent role in helping defuse the crisis. We will continue talks today and will emerge with a fair and just decision," Waili told a news conference.
Since the US-led invasion of Iraq and the overthrow of the Sunni-Arab Saddam Hussein in April 2003, Shia gunmen have formed several armed groups.
Some are linked to political movements such as the Iranian-backed Supreme Council for the Islamic Revolution in Iraq (SCIRI) or al-Sadr's office, which have a role in al-Maliki's coalition government and enjoy a measure of political cover. Others are little more than lawless death squads.
Increasingly, local conflicts are spiralling out of control and units are escaping the command of their nominal chieftains, prompting US officers to label the armed groups the biggest single threat to Iraq's stability.