Iraqi police gave SAS pair to militia before rescue

• The Iraqi police suspected the arrested soldiers were spies

• The police handed the soldiers over to the local militia

• The outlawed al-Mahdi army is believed to have infiltrated the Iraqi police

Key quote

"What we do know is that under the law, they should have been handed back to the British forces themselves. That is the law which enshrines our presence there." - John Reid, Defence Secretary

Story in full THE Iraqi government last night promised a full inquiry into how local police handed two arrested SAS soldiers to militiamen, as fresh fears were raised that the country was sliding into civil war.

The move came as Monday's dramatic rescue operation, following the arrest of the soldiers by Iraqi police who suspected they were spies, threatened to stoke further hostility towards British troops in the increasingly volatile southern city of Basra.

The special forces soldiers were freed in a controversial operation which saw British troops bulldoze the wall of the Jamiat police station jail in Basra.

But it emerged yesterday that the prisoners had already been handed over to the militia and were later found being held in a nearby house.

Their capture came just a day after British forces in Basra arrested two leading members of the outlawed al-Mahdi army which is loyal to firebrand cleric Muqtada al-Sadr and is widely believed to have heavily infiltrated the local Iraqi police. They were Sheikh Ahmad Majid al-Fartusi, the group's Basra area commander, and Sajjat al-Basri, his aide.

The SAS men appear to have been quickly handed over to militiamen by police and the mission to rescue them, which has been condemned by many Iraqis, was launched amid fears they could face summary execution.

One Iraqi MP said that after the arrest of the SAS men the al-Mahdi had tried to take them hostage, to exchange them for its two leaders.

The Iraqi government yesterday criticised British forces over the operation. "It is a very unfortunate development that the British forces should try to release their forces the way it happened," Haider al-Ebadi, an adviser to Ibrahim Jaafari, the prime minister, told a news conference in Baghdad.

Mr Ebadi said Iraqi police were justified in arresting the pair. "They were acting very suspiciously like they were watching something and collecting information in civilian clothes in these tense times," he said.

The rescue operation followed rioting that began, according to police and local officials, when the two men fired on a police patrol. At least two Iraqis were killed and three British soldiers injured in the violence.

John Reid, the Defence Secretary, defended the British action. He said: "We don't actually know the details of why these people were handed over - whether it was under threats or by collusion, or whatever.

"What we do know is that under the law, they should have been handed back to the British forces themselves. That is the law which enshrines our presence there. I understand also that the minister of the interior, at the highest level, instructed that they should be, that the local judicial authorities said the same.

"And that is why in the course of the day, while we were negotiating, in view of that fact that they weren't handed over, we got increasingly worried and the commander on the spot, with hindsight, was absolutely right to do what he did because we discovered they weren't in the police station, they were somewhere else, but they are now safe."

The Iraqi prime minister's office later released a statement: "In response to recent events in Basra, the Iraqi government wants to clarify that there is no 'crisis'- as some media have claimed - between it and the British government. Both governments are in close contact, and an inquiry will be conducted by the Iraqi Ministry of the Interior into the incident. We will await the outcome of that inquiry. In the meantime we urge all sides to remain calm."

The Ministry of Defence confirmed the number of troops in Iraq, currently about 8,300, would not be reduced when a fresh deployment, including the Highlanders, begins replacing those serving in Iraq next month.

Southern Iraq is home to several Shiite militias who oppose the presence of foreign troops and have led uprisings against the US military. Iraqis say the militias act with impunity and are not answerable to the central government.

This summer, Steven Vincent, a freelance journalist, was abducted and murdered in Iraq after writing a column in the New York Times accusing Basra police of being infiltrated by Shiite militiamen.

James Brandon, a freelance for The Scotsman, who was last year kidnapped by a gang of militiamen in Basra and only freed after pressure from al-Sadr, claimed the militia were "running the show" in the southern city. "These kind of militia would appear to be becoming more confident if they are seizing special forces. They are trying to test the boundaries of British control," he said.

Charles Kennedy, the Lib Dem leader, said the events confirmed his fears that Iraq was drifting towards civil war and called on the government to set out an exit strategy for British troops.

He said: "The most worrying thing of all is if we are now seeing a breakdown in communication, trust and co-operation between the British forces and aspects at least of the Iraqi domestic security forces. That really does begin to raise very profound questions indeed."

Stuart Crawford, a former Lieutenant-Colonel who served in the first Gulf war, said: "The plan to hand over to the Iraqi security forces faces at least being delayed, if not interminably delayed. The risk of withdrawal is that that creates a further degeneration in the security situation, leading to civil war."