Hopes for a ceasefire in Iraq’s developing Shia civil war were swiftly undermined last night when the Government said that it would not stop attacking outlaw militia members despite an offer from militia leaders to freeze the conflict.

Fierce fighting went on in areas of Basra loyal to Hojatoleslam Moqtada al-Sadr, despite the rebel cleric’s call to his militiamen to put down their weapons. In Baghdad mortars continued to slam into the green zone government compound.

British troops stationed at Basra airport were deployed outside their base for the first time yesterday, backing up Iraqi forces on the edge of the city. The grand plan to start reducing the British presence in southern Iraq to 2,500 from the spring will be put on hold formally tomorrow when the Government announces a pause in troop cuts.

Final advice has yet to be given to ministers, but Des Browne, the Defence Secretary, is expected to tell the Commons that it is prudent to freeze the drawdown plans until the security conditions in Basra become clearer. Senior military officials are expected to advise that a full brigade of about 4,100 British troops was still needed, even though the bulk of the Service personnel is located well away from Basra city at the airport.

Hojatoleslam al-Sadr, who had told his thousands of loyalists not to lay down their arms in a televised interview on Saturday, did an about-turn yesterday when his negotiators said they were announcing a ceasefire. He called on the Government to give his al-Mahdi Army militiamen an amnesty in return, release prisoners and cease attacks on his strongholds.

“Because of the religious responsibility, and to stop Iraqi blood being shed . . . we call for an end to armed appearances in Basra and all other provinces,” he said in a statement.

Nouri al-Maliki, the Shia Prime Minister, who appeared to be failing in his high-stakes gamble to take the southern city of Basra from well-armed militias, also did a volte-face, engaging in talks with Sadrists after describing his foes as “worse than al-Qaeda”, the terrorist organisation that had brought Iraq to its knees.

However, almost immediately after welcoming the Sadrist decision, Ali al-Dabagh, a government spokesman, said that the army would continue attacking what it terms criminal elements in Basra, even though it appeared to be scarcely making any progress in its military operation. “The operation in Basra will continue and will not stop until it achieves its goals. It is not targeting the Sadrists, but criminals,” he said.

While news of the ceasefire was spread by mosques through cities in the Shia south, with al-Mahdi Army members handing out sweets in the streets to celebrate, fighting was again flaring in Kut, to the southeast of Baghdad, where soldiers tried to seize areas taken by the al-Mahdi Army. Mahdi commanders in Sadr City, the militia’s Baghdad stronghold, quickly responded by saying they would not put down their weapons or remove booby-traps placed on the huge slum’s roads to prevent an attack by Iraq and US forces besieging the area.

Mr al-Dabagh appeared to be hoping that Hojatoleslam al-Sadr would allow the government forces to save face by cracking down on what it terms rogue militias, fringe groups often funded by Iran who are engaged in extortion, kidnapping, oil smuggling and murder, as opposed to militia groups simply securing their neighbourhoods against terror attacks.

However, such distinctions have been blurred in Iraq’s dirty sectarian war and power struggles. Most Sadrists, and some independent observers, see the government assault as an attempt by Mr Maliki to wipe out the Sadr movement as a political force ahead of autumn provincial elections, which they believe they will win.

Any climbdown by Mr al-Maliki would be seen as a serious loss of face. He has already failed to clear out the al-Mahdi Army from Basra despite a week’s fighting with 30,000 soldiers and policemen at his disposal. The Mahdi Army said it held large swaths of Basra yesterday, and the Government admitted that Mr al-Maliki’s field headquarters there had been mortared by the rebels, killing a top top security official.

Mr al-Maliki conceded that he had underestimated the resistance that he would face, while his Defence Minister said the senior command had been forced to rethink strategy. US special forces have started operating alongside Iraqi troops and British soldiers were deployed to positions on the edges of Basra.

With all the security forces’ energies focused on keeping a lid on the violence in the south, Sunni insurgents suddenly resurfaced in the north, a possible sign that extremists linked to al-Qaeda could use the turmoil and Shia infighting to reignite their campaign to destroy the state.

Times Recommends

• 'Radio Rancid' is scourge of Obama
• French gulp as global warming alters wines
• Colton, the barefoot boy bandit, outfoxes sheriffs