"We are not aware of the incident," said a spokesman for the Ministry of Defence in London.

Iraqi police said earlier that Shiite Muslim militiamen had killed a British soldier in an incident which erupted after the shooting down a drone over Amara which was taken to the local headquarters of Shiite radical leader Moqtada Sadr.

Warrant officer Mohammad Attiya Obeid, who witnessed the incident, said a unit of about 20 British soldiers arrived on the scene of the crash shortly afterwards and the rebels opened fire "killing one British soldier and wounding two others." He added the unit then pulled back.

But the British spokesman said: "We have looked into that, as far as I'm aware there is no truth about reports or another way about any death at all amongst British troops anywhere."

He added it was "still relatively calm" in Amara, "perhaps a bit tense but nothing is actually happening. It is calm but tense as it has been in the last couple of days."

He refused to comment on the fierce clashes which have pitted US forces against Sunni Muslim insurgents in the Iraqi town of Fallujah, west of Baghdad, for the past days saying "the Americans are dealing with different issues, so it is not really for us to comment."

WAR.WIRE