British Defense Ministry Secretary John Reid confirmed two British military personnel were "released," but he gave no details on how they were freed.

In a statement released in London, Reid did not say why the two had been taken into custody. But the Iraqi official, who spoke to CNN on condition of anonymity, said their arrests stemmed from an incident earlier in the day.

The official said two unknown gunmen in full Arabic dress began firing on civilians in central Basra, wounding several, including a traffic police officer. There were no fatalities, the official said.

The two gunmen fled the scene but were captured and taken in for questioning, admitting they were British marines carrying out a "special security task," the official said.

British troops launched the rescue about three hours after Iraqi authorities informed British commanders the men were being held at the police department's major crime unit, the official said.

Iraqi police said members of Iraq's Mehdi Army militia engaged the British forces around the facility, burning one personnel carrier and an armored vehicle.

Video showed dozens of Iraqis surrounding British armored vehicles and tossing gasoline bombs, rocks and other debris at them.

With one vehicle engulfed in flames, a soldier opened the hatch and bailed out as rocks were thrown at him. Another photograph showed a British soldier on fire on top of a tank.

"Many of those present were clearly prepared well in advance to cause trouble, and we believe that the majority of Iraq people would deplore this violence," Reid said.

Reid said both troops were "being treated for minor injuries only and are expected to return to duty shortly."

He said British forces "remain committed to helping the Iraqi government for as long as they judge that a coalition presence is necessary to provide security.

"The situation in Basra is currently calmer after a day of disturbances. At this stage, it is not possible to be certain why these disturbances began," he said.

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Two British soldiers freed after tanks broke into a Basra prison were being held by Shia militiamen, the Ministry of Defence said.
The MoD said the men had been found at a nearby house after troops broke into the city's prison to look for them.

Basra governor Mohammed al-Waili called the Army action a "barbaric act of aggression".

The arrests sparked unrest in which UK tanks came under attack. Reports said two Iraqi civilians were killed.

The two men - thought to be British servicemen working undercover - were accused of opening fire on local police.

An MoD spokesman said: "Two British soldiers were detained and taken to an Iraqi police station. We then started negotiating with the Iraqi authorities for their release.

"We understand that the authorities ordered their release. Unfortunately they weren't released and we became concerned for their safety and as a result a Warrior infantry fighting vehicle broke down the perimeter wall in one place.

"Our guys went in there and searched it from top to bottom in order to go and recover our two soldiers who had been detained.

"They weren't there unfortunately but we did obtain intelligence that pointed to where they were. We then launched another operation to recover them, from a house in Basra."

Mr al-Waili said more than 10 tanks and helicopters were used in the operation at the jail.

The MoD denied witness reports to the Associated Press that about 150 prisoners escaped after the demolition of the wall.

Flaming tanks

Earlier, two British tanks sent to the police station where the soldiers were being held, were set alight in clashes.

Crowds of angry protesters hurled petrol bombs and stones, injuring three servicemen and several civilians.

TV pictures showed soldiers in combat gear clambering from one of the flaming tanks and making their escape - three soldiers were reportedly injured.


British officials would not say if the two men were working undercover

In a statement, Defence Secretary John Reid said the soldiers who fled from the tanks were being treated for minor injuries.

Mr Reid added that he was not certain what had caused the disturbances.

"We remain committed to helping the Iraqi government for as long as they judge that a coalition presence is necessary to provide security," the statement said.

Tensions have been running high in the city since the arrest of a senior figure in the Shia Mehdi Army by UK troops.

But Colonel Tim Collins, the former commander of British troops in Iraq, described the Basra unrest as like a "busy night in Belfast".

Col Collins said it did not represent a breakdown of law and order in Basra, which was still a safer city than Baghdad.