BRITISH forces were on standby tonight to retake the southern Iraqi town of al-Amarah after Shia militiamen loyal to the fundamentalist cleric Hojatoleslam Moqtada al-Sadr stormed the town.

Hundreds of Iraqi army and police reinforcements have already been rushed to the volatile town of feuding tribes and smugglers on the Iranian border. British troops withdrew from al-Amarah just two months ago, after a daily bombardment of mortar fire. Commanders in Basra were hastily assembling an expeditionary force to rejoin the fray if the Iraqis could not secure the town.

"We’re putting together a forces package here," said Major Charlie Burbridge, the British army spokesman in Basra. He added that at least one police station in al-Amarah had been torched and another abandoned by its occupants. The British reinforcement contingent could include as many as 500 troops backed by helicopters.

The town’s descent into anarchy is a major blow to British policy in the south. In August, the army quit its base in al-Amarah, under daily mortar attack by Shia militiamen. After the withdrawal, troops patrolled the Iranian border in an effort to intercept weapons smugglers. The town was deemed stable enough to be transferred to Iraqi forces, but looters stripped the camp as soon as the British left.

The fighting follows hard on the heels of a rampage of ethnic cleansing also blamed on the Mahdi Army, Moqtada al-Sadr’s violent militia, in the town of Balad, north of Baghdad. US forces had transferred security control to Iraqi troops a month ago but were forced to return to quell a killing spree that left close to 100 people dead.

Some witnesses in al-Amarah reported that hundreds of black-clad Mahdi fighters had taken control of the town, blowing up three police stations with explosives after driving out the police with assault rifles and rocket-propelled grenades.

As in Balad, militiamen set up roadblocks around the town and warned residents to stay indoors.

Moqtada al-Sadr himself issued pleas to the fighters for restraint, and Major Burbridge played down reports of al-Amarah falling to the Mahdi Army.

"We’re looking at 200 to 300 gunmen that are operating as a rogue element of the militias in that town. It’s very difficult to take control of a town of that size with a group of 300 gunmen," he said.

Nouri al-Maliki, the Shia prime minister whose government depends on the collaboration of the powerful Sadrist parliamentary bloc, dispatched an emergency delegation headed by the state minister for security affairs to seek an end to the fighting.

Mr al-Maliki this week ordered the release of senior Sadr loyalist arrested in a raid by US troops and accused of complicity in death squads operating in the capital.

The fighting erupted in al-Amarah last night after the head of police intelligence in Maysan province, a member of a rival Shiia militia, the Badr Brigade, was killed by a roadside bomb. The Badr Brigade is the militia of the Supreme Council for the Islamic Revolution in Iraq (Sciri) which is the other main plank in Mr al-Maliki’s fractious government.

The family of the slain police official took revenge by kidnapping the teenage brother of the local commander of the Madhi Army. Such kidnappings are common practice in Maysan, a lawless province where six British military policemen were murdered by a mob just after the 2003 invasion.

The clashes were still underway this evening, killing at least 15 people, including five militiamen, one policeman and two bystanders. More than 90 people have been wounded.

Major Burbridge described the clashes as "very serious." "It’s people sitting behind barricades and shooting at each other. It’s like the Wild West," he said. He said it would be "disheartening" if British troops were forced to storm the town again.

When British forces left their base in August, Shia militants claimed to have driven them out. Major Burbridge yesterday admitted the troops had "repositioned" in desert patrols along the Iranian border partly in response to the constant mortar fire.

"We had been mortared every day, or virtually every day," he told The Times. "We were a bull’s eye right in the middle of the town. We had to remove that bull’s eye, it was becoming a symbol of insecurity in Maysan."

The inter-Shia fighting also undermined hopes that dividing Iraq into autonomous ethnic states may pave a way to peace. The Shia-dominated south of Iraq holds much of the country’s vast oil wealth, and today's clashes could foreshadow future power struggles within the diverse Shia population itself for control of the reserves.

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