Iraqi sources say a number of people have died after violence broke out on the streets of Basra yesterday evening.
British troops clashed with Iraqis in the southern city following a helicopter crash yesterday in which a number of British servicemen died.
Police have claimed that five people were shot in the unrest, but it is not yet clear who fired the shots.
Troops in armoured battle vehicles, some with riot shields, cordoned off the crash site, while youths chanting "Victory to the Mehdi Army" threw rocks and petrol bombs. Soldiers used foam to douse fires ignited on their vehicles.
Morgue officials said they knew of four Iraqis killed in the confused hours of violence after youths at the crash site chanted victory slogans for the Mehdi Army, a militia opposed to the occupation.
British military spokesman Squadron Leader Al Green said troops counted about 60 rounds fired in the air from the crowd. In London, a Ministry of Defence statement said British forces fired three live rounds in defence when they came under attack.
A local journalist said he was hit in the leg by a British baton round and saw troops aim their ordinary rifles. He said he saw at least one man dead. Witnesses said a second man may have died in a car.
Several people, including children, were wounded when a mortar round later struck a house nearby, witnesses said.
The British government has confirmed "a number of" British military personnel were killed in the helicopter crash, but said the cause was unclear. Police claim a rocket hit the helicopter, and firefighters said they found four bodies in the aircraft, which hit a house.
No one on the ground was hurt in the crash, police said.