Heavy fighting broke out in the southern Iraqi city of Basra on Saturday, where government forces seized a neighbourhood known as a stronghold of fighters loyal to anti-US Shi'ite cleric Moqtada Al-Sadr.

The sound of heavy gunfire and explosions could be heard at dawn in what sounded like the heaviest fighting for weeks in the city, where Prime Minister Nuri Al Maliki launched a crackdown on Sadr's followers late last month.

After several hours the fighting appeared to die down but sporadic gunfire could still be heard.

The commander of Iraqi forces in the city, Lieutenant-General Mohan Al Furaiji, said his troops had seized the centre of the Hayaniya neighbourhood, long one of the main strongholds of Sadr's Mehdi Army fighters.

"Our troops moved in there, and now they have reached the centre of Hayaniya. Now there are no confrontations, and anyone carrying weapons will be arrested," he said.

"We are chasing fugitives and arresting them. We expect within the next few hours that the operation will be concluded successfully." No information about casualties was immediately available.

Maliki's crackdown against the Mehdi Army in Basra in late March initially failed to drive the militia from the streets and resulted in uprisings in strongholds of Sadr fighters throughout the south of the country and the capital Baghdad.

Fierce fighting also took place late on Friday in Sadr City, a crowded slum in east Baghdad that forms the cleric's main powerbase in the capital.

The fighting against Shi'ite militia has been the largest test so far of Iraq's government troops, which took the lead especially in the south where there are few US forces and British troops are mainly confined to a single base in Basra.

US commanders have said the March crackdown in Basra was carried out too suddenly and was poorly planned. The government fired 1,300 soldiers and police for refusing to stand and fight.

But in the weeks since, government forces have moved more slowly and deliberately into Sadr-controlled areas, arresting Mehdi Army figures while largely avoiding major street battles.

On Monday they scored a victory in Basra, freeing a British journalist in a raid on a house where he was held by militants.-Reuters