The soldiers were travelling five miles east of Shaibah - the British logistics headquarters south-west of Basra - when the explosive device went off at 8.30am British time yesterday.
They are the first soldiers killed by hostile action near Basra for almost a year. Other British soldiers have been killed in the more volatile area of Amarah or north of the British-controlled sector.
Yesterday, the Ministry of Defence said details of names or regiments would not be released until all next of kin had been contacted.
"We can confirm that two soldiers from Multi-National Division South-East died this morning at 11.30 local time from injuries sustained in a roadside bomb explosion in Basra province," said an MoD spokesman.
John Reid, the Secretary of State for Defence, said: "I would like to offer my sympathy and personal condolences to the families of the two service personnel who lost their lives in Iraq.
"It is deeply tragic that they have been killed whilst carrying out their duty."
Tony Blair was told of the deaths while attending an EU-China summit in Beijing. Mr Blair's spokesman said: "We will watch developments with sadness, as whenever attacks like this occur in Iraq."
Fifty-five servicemen have died in action since the beginning of Operation Telic, the name for UK military operations in Iraq. The rest - including one civilian firefighter and a Royal Navy chief petty officer on a ship not assigned to Telic - have died of natural causes, accidents or incidents which remain under investigation.
The last soldiers to die from hostile action in the Basra region were Corporal Marc Taylor, 27, and Gunner David Lawrence, 25, who were killed when their convoy was ambushed in September last year.