At least half a dozen British tanks sensationally smashed through the walls of the Basra’s central jail tonight and freed two UK soldiers arrested earlier in the day after a lethal gunbattle with Iraqi policemen.

The two men, said to be on an undercover intelligence mission, were sprung only hours after British forces had encircled the building but were forced to flee by a violent mob hurling stones and Molotov cocktails. Two Iraqi civilians were reportedly killed in the riots, during which two UK Warrior armoured vehicles were set alight.

Aquil Jabbar, an Iraqi television cameraman who lives across the street from the jail, said about 150 Iraqi prisoners also fled as British commandos stormed inside and rescued their comrades.

The Iraqi Interior Ministry confirmed that the British soldiers had been freed, one official saying that six UK tanks had been involved in the operation. But Mohammed al-Waili, the governor of Basra province, said at least ten tanks were deployed in the “barbaric, savage and irresponsible” raid.

“A British force of more than 10 tanks backed by helicopters attacked the central jail and destroyed it. This is an irresponsible act,” said Mr al-Waili said, adding that the British force had spirited the prisoners away to an unknown location.

The incident was one of the most bizarre tales to emerge from the Iraq since the US-led invasion of March 2003 - especially given the amount of time and money spent by the British Army training Iraq’s post-Saddam police force. Although Basra, where UK forces are headquartered, has been relatively calm compared to Baghdad, the southern city and its police force has reportedly come under the direct control of Shia Muslim militias.

An Iraqi official told the Reuters news agency that the two "undercover" British soldiers, who were travelling in a civilian car, were arrested this morning after clashing with Iraqi police. Reports said the soldiers killed one Iraqi policeman and wounded another.

The official said he had been informed by the British military that they were "undercover soldiers". It was not clear what unit the men were from - whether they were regular soldiers or from the special forces.

"They were driving a civilian car and were dressed in civilian clothes when a shooting took place between them and Iraqi patrols," he said. "We are investigating and an Iraqi judge is on the case questioning them."

A Basra police source said the two men, who he said were wearing Arab costume, had opened fired at a police patrol when they were asked to stop. Photographs of the British soldiers showed them with light beards. One of them was wearing bandage around his head.

Mohammed al-Abadi, an official at the Basra governorate, said the two men looked suspicious to the police.

"A policeman approached them and then one of these guys fired at him. Then the police managed to capture them," Mr Abadi told reporters. "They refused to say what their mission was. They said they were British soldiers and to ask their commander about their mission."

Reuters News Agency earlier published photographs of the two soldiers taken after their capture. The photographs showed the unshaven pair in custody, dressed casually in T-shirts and trousers, and sitting on the floor with their hands behind their backs.

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