Iraqi government troops said they captured a stronghold of fighters loyal to anti-U.S. Shi'ite cleric Moqtada al-Sadr in Basra on Saturday after a massive show of force by U.S. warplanes and British artillery.

Thundering explosions and gunfire could be heard at dawn under the heaviest bombardment since Prime Minister Nuri al-Maliki launched a crackdown on Sadr's followers late last month in the southern city.

The commander of Iraqi forces in Basra, Lieutenant-General Mohan al-Furaiji, told Reuters his troops had seized the centre of the Hayaniya neighbourhood, one of the main strongholds of Sadr's Mehdi Army fighters.

"Our troops moved in there, and now they have reached the centre of Hayaniya. Now there are no confrontations, and anyone carrying weapons will be arrested," he said.

"We are chasing fugitives and arresting them. We expect within the next few hours that the operation will be concluded successfully."

After several hours the fighting appeared to die down but sporadic gunfire could still be heard.

British military spokesman Major Tom Holloway said Saturday's offensive had been launched with a heavy bombardment by U.S. warplanes and British artillery "to give a demonstration of the firepower available if required".

The American and British forces pounded a deserted area west of Hayaniya before Iraqi troops entered the neighbourhood, he said. The bombardment was intended to be the biggest show of force since the crackdown began in late March, he added.

"Initial reports that we are aware of is, yes, there has been fighting, but it's isolated skirmishes," he said.

No information about casualties was immediately available.

A Reuters reporter in Nassiriya, another southern provincial capital, said there were also clashes between government troops and Mehdi Army fighters in a nearby town and a curfew had been imposed.

Maliki's crackdown against the Mehdi Army in Basra in late March initially failed to drive the militia from the streets and resulted in fighting in strongholds of Sadr fighters throughout the south of the country and the capital Baghdad.

The prime minister, himself a Shi'ite, has since threatened to ban Sadr's mass movement from political life if the cleric does not disband the Mehdi Army. In response, Sadr threatened to formally scrap a ceasefire he imposed on his militia last August, a move that could trigger a full-scale uprising.

Fierce fighting also took place late on Friday in Sadr City, a crowded slum in east Baghdad that forms the cleric's main powerbase in the capital.

The fighting against Shi'ite militiamen has been the biggest test so far of Iraq's government troops, which took the lead especially in the south where there are few U.S. forces and British troops are mainly confined to a single base in Basra.

U.S. commanders have said the March crackdown in Basra was carried out too suddenly and poorly planned. The government fired 1,300 soldiers and police for refusing to stand and fight.

But in the weeks since, government forces have moved more slowly and deliberately into Sadr-controlled areas, arresting Mehdi Army figures while largely avoiding major street battles.

On Monday they scored a victory in Basra, freeing a British journalist in a raid on a house where he was held by militants.