Iran has secretly funded insurgent attacks on British soldiers stationed in southern Iraq, a British newspaper reported Sunday.

According to a leaked British government document obtained by London's Daily Telegraph, Jaish al-Mahdi (JAM) – also known as the Mahdi Army — used hundreds of thousands of dollars funneled from Iran to pay fighters to carry out strikes against U.K. forces in Basra.

The report, "Life Under Fire in the Old State Building", details how "Iranian finance teams" worked in the area to recruit and pay unemployed men up to $300 a month to becoming insurgent fighters, the Telegraph reported.

According to the report, discovery of Iran's involvement came from a network of 25 local sources, including a former Iraqi army general, prominent businessmen and local sheikhs.

A senior British officer said that, although officially denied, the existence of Iran's influence in Basra was widely known by the British military, the Telegraph reported.

British forces withdrew from the city in September 2007, but the leak is the latest evidence that Iran continues to send money and weapons into Iraq to fund insurgent activity, and comes amid rising tension between Iran and the international community over its denial that Tehran is developing a nuclear weapons program.

Click here to read the full report in the U.K.'s Daily Telegraph.