Al Qaeda fighters may be in southern Iraq, coordinating grenade and gun attacks on British forces in a town near Basra, it was reported last night.

"The information we have received from POWs today is that an Al Qaeda cell may be operating in Az Zubayr. There are possibly around a dozen of them," a British military source in Iraq told a reporter for The Scotsman.

British troops were believed to be planning a military strike on the Al Qaeda hideout, the newspaper said.

If the prisoners’ reports are true, they may provide a concrete link between Saddam Hussein’s regime and the terrorists who attacked the World Trade Center.

Several links between Al Qaeda and Iraq have been reported previously:

-- In northern Iraq, an Al Qaeda-affiliated group called Ansar al-Islam is allegedly plotting suicide attacks on U.S. forces and has allegedly experimented with chemical weapons.

Two members of an Afghanistan-based Al Qaeda cell were killed this week in a shootout between U.S. and Ansar al-Islam forces, and the group’s base also has been bombed.

Reports say Ansar al-Islam has about 600 members -- and it may be getting reinforcements from Al Qaeda cells in Chechnya and other regions, sources told The Post earlier this week.

The group also is blamed for a suicide bombing Saturday that killed an Australian TV cameraman.

-- Two dozen "Al Qaeda affiliates" followed terrorist Abu Mussab al Zarqawi when he sought medical treatment in Baghdad, and remained there afterward, Secretary of State Colin Powell told the United Nations last month.

-- In the Philippines, a terrorist with the Abu Sayyaf Muslim extremist group -- believed to be loosely affiliated with Al Qaeda -- allegedly telephoned an Iraqi diplomat in Manila last year with the same cell phone used to trigger a bomb attack.