British armored vehicles broke down the walls of the central jail in this southern city Monday and freed two British soldiers, allegedly undercover commandos arrested for shooting two Iraqi policemen, witnesses said. But London said the two men were released as a result of negotiations.

The different versions of events came on a chaotic day that raised questions about how much sovereignty Iraqi authorities really were granted when the U.S.-led Coalition Provision Authority (search) handed over power to an interim Iraqi government in the summer of 2004.

The arrests of the two British soldiers Monday appeared to have been the first real and public test of how far that sovereignty extends. There have been no known incidents of Iraqi authorities arresting U.S. soldiers operating in the Iraqi heartland.

Mohammed al-Waili (search), the governor of Basra province, condemned the British for raiding the prison, an act he called "barbaric, savage and irresponsible"

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

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

Late Monday, the Ministry of Defense in London said the two British soldiers were freed after negotiations. A spokesman said he had no information suggesting they were freed as a result of overt military action, but stopped short of denying reports that British armor crashed through the walls of the jail.

According to the BBC, Defense officials insisted they had been talking to the Iraqi authorities to secure the release of the men, but acknowledged a wall was demolished as British forces tried to "collect" the two prisoners.

While the Shiite-dominated south of Iraq, where 8,500 British troops are based, has been far quieter than Sunni regions to the north, Britons have come under increasingly frequent attacks in recent weeks. The British military has reported 96 deaths since the war began in 2003.

That compares with the deaths of 1,899 Americans who are stationed nearer the violent insurgent regions around Baghdad and stretching west to the Syrian border.

The latest violence in the oil city of Basra, 340 miles south of the capital, began early Monday when local authorities reported arresting the two Britons, described as special forces commandos dressed in Arab clothing, for allegedly shooting two Iraqi policemen, one of whom died.

British armor then encircled the jail where the two Britons were held.

In a public humiliation, television cameramen from Arab satellite broadcasters in the Persian Gulf were allowed to photograph the two men, clearly Westerners who were by that time sitting on the floor in the jail in blue jeans and T-shirts, their hands tied behind their backs.

One of the men had a bandage covering most of the top of his head, the other had blood on his clothes. Television commentary identified them only as Britons.

Outside the jail, a melee broke out in the streets as angry demonstrators attacked the encircling British armor with stones and Molotov cocktails. During the chaos, one British soldier could be seen scrambling for his life from a burning Warrior armored personnel carrier and the rock-throwing mob.

Press Association, the British news agency, reported that three British soldiers were hurt during the violence, but said none of their injuries was life-threatening.

After nightfall, 10 British armored vehicles returned to the jail, crashed through walls and freed the two captives, witnesses said. An Associated Press reporter saw the vehicles smash into the jail.

While witnesses and officials said the British raid used "tanks," it was not clear whether the tracked vehicles were Challenger 2 Main Battle Tanks or Warrior Infantry Fighting Vehicles, both in use by British forces in Iraq. The Warrior seen earlier in the day was mounted with a 30 mm cannon.

In other violence in Basra, an Iraqi journalist working for The New York Times was killed after men claiming to be police officers abducted him from his home, the newspaper announced Monday. Fakher Haider (search), 38, was found dead in a deserted area on the city's outskirts Monday after his abduction late Sunday.

This past summer, freelance journalist Steven Vincent (search) wrote a column in the Times accusing Basra police of being infiltrated by Shiite militiamen. Shortly thereafter, on Aug. 2, Vincent was abducted at gunpoint and his body was discovered that night on the side of the highway south of Basra. A senior British official said Islamic militants — and not Iraqi police — probably killed Vincent.

Elsewhere in Iraq on Monday, an estimated 3 million pilgrims — some carrying signs reading "We welcome martyrdom" — jammed the holy city of Karbala for a major Shiite festival in defiance of insurgent declarations of all-out sectarian war.

In Baghdad, an Iraqi court sentenced one of Saddam Hussein's (search) nephews to life in prison for funding the country's violent insurgency and bomb-making after a previously unannounced trial. It was the first known trial of any of the former leader's family.

Militants waged more bloody attacks across the country Monday, killing 24 police and civilians and wounding 28.

But there were no attacks in Karbala, where security was so tight that authorities had banned vehicles from entering for several days before the holiday. Pilgrims were forced to pass through seven checkpoints inside the city before reaching holy shrines.

In an Internet posting, Al Qaeda (search) in Iraq leader Abu Musab al-Zarqawi (search) purportedly issued a new vow, promising he would not attack followers of radical Shiite cleric Muqtada al-Sadr (search) and other Shiite leaders opposed to Iraq's U.S.-backed government.

Last Wednesday, after insurgent forces were routed from their stronghold in the northern city of Tal Afar (search), al-Zarqawi, a Jordanian-born Sunni Arab, declared all-out war on Iraq's majority Shiites.

But in the statement Monday on a Web site known for carrying extremist Islamist material, al-Zarqawi now appeared set on trying to split the Shiite community.

"Any Shiite group that condemns the government's crimes against the Sunnis in Tal Afar, and which doesn't provide help to the occupation by any means, will be exempted from the attacks of the mujahedeen (search)," said the statement, which could not be immediately authenticated.