Iraqi officials accused Iranian forces of "kidnapping" a coastguard patrol after a clash on their tidal frontier and demanded the men's release today.
Iranian foreign ministry staff initially flatly denied reports that the Islamic Republic's forces had seized the men, but later said a fight between an Iranian cargo ship and an Iraqi patrol was "under investigation".
The affair is a test of the new warmth in relations between Baghdad and Tehran since pro-Iranian Shi'ites took control in Iraq after US forces overthrew Saddam Hussein.
Iraqi President Jalal Talabani stepped in to cool tempers, conceding the nine Iraqis might have strayed across the border in the shifting tidal shoals of the Shatt al-Arab and calling their arrest a "mistake" that would soon be sorted out.
Earlier, Iraq's foreign minister called in the Iranian envoy to seek the release of nine coast guards Iraq said were seized after an exchange of fire involving suspected oil smugglers on their long-disputed and poorly defined border along the estuary.
But Iran's Baghdad embassy denied knowledge of the incident, which Iraqi officials said happened on Saturday or Sunday.
The regional governor in Basra accused the Iranians of "martyring" one Iraqi and "kidnapping" eight but said later he had been unable to confirm the death: "He has serious injuries and there are reports that he has died, but I have not been able to verify that," Mohammed al-Waili told Al Arabiya television.
The central government in Baghdad was more restrained and a government spokeswoman said she did not know of any casualty.
Foreign Minister Hoshiyar Zebari raised the issue in a meeting with Iranian charge d'affaires Hasan Kazemi-Qomi, an Iraqi Foreign Ministry spokesman said.
But Kazemi-Qomi said through a spokeswoman: "The reports of this incident are untrue." He made no further comment.
The Iranian Foreign Ministry in Tehran agreed the reports were "incorrect". However Foreign Ministry spokesman Hamid Reza Asefi later told agencies a clash had taken place.
"The cause of a fight between a cargo ship and Iraqi patrolling forces is under investigation," he was quoted as saying by three Iranian news agencies.
Asefi was not immediately available to comment.