'Undercover' Britons held after Basra shootings

Authorities said four civilians were wounded in the clashes that broke out after the arrest of the two men, identified by Basra security officials as British undercover officers dressed as Arabs.

Basra, Iraq's second largest city and 340 miles south of Baghdad, is headquarters for the 8,500 British troops deployed the south of the country.

The arrested men were taken to the city's main Felony Crimes department, said Ismail al-Waili, chief of the city's Security Committee.

British military officials in London declined to comment on reports that the men were soldiers working undercover.

But the Ministry of Defence said: "We can confirm that two military personnel were detained by Iraqi authorities earlier today."

Shortly after the Britons were arrest, British troops encircled the building and demonstrators began to gather, said al-Waili.

Yesterday, about 200 members of the al-Mahdi Army, a militia group headed by the radical Shiite cleric Muqtadah al-Sadr, staged a show of force in Basra, blocking roads in the city centre and demanding the release of their local commander who had been arrested by British and Iraqi security forces. He was accused of launching raids against security forces in the city.

After a tense stand-off lasting several hours, the militiamen withdrew when an al-Sadr representative arrived to negotiate with police and the British forces.

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