British troops in Kuwait have come under fire during a "cross border skirmish" with Iraqi soldiers.
British troops are engaged in "certain military" operations
Members of 7 Para Royal Horse Artillery said they were shot at from the Iraqi side of the border and they had returned fire.
None of the British soldiers - who specialise in helicopter "fast drops" into frontline positions - were hurt and there was no news of Iraqi casualties.
The exchange happened as UK troops were poised on Iraq's southern border for a land invasion.
In a statement to the Commons on Thursday, UK Defence Secretary Geoff Hoon played down suggestions that an easy victory was expected against Iraq - calling the country's regime "the embodiment of absolute ruthlessness".
The defence secretary also told MPs that British forces were "already engaged in certain military operations."
Prime Minister Tony Blair is to make a televised address to the nation on Thursday night, once "UK forces are substantially engaged", Downing Street has confirmed.
The Queen has sent a message of support to troops in the Gulf, while a series of visits to military bases in the UK by members of the Royal Family has been announced.
Wing Commander Dave Bye, commander of a base from where Tornado bombers have been sent to the Gulf, said RAF aircraft had not yet been involved in offensive action but could be sent on operations "within 24 hours".
Hunt and destroy
Meanwhile, the US military is preparing to load bombs onto 14 bombers at RAF Fairford in Gloucestershire.
Earlier, chemical and biological alerts were triggered among British forces when Iraq reportedly fired missiles - now believed to be conventional weapons - into northern Kuwait.
After the reported attacks, British fighter planes were sent to hunt and destroy the missile batteries used.
RAF spokesman Group Capt John Fynes said: "Harriers are being scrambled in response to a threat to the coalition forces and today we had missiles fired into Kuwait."
He said three missiles had been fired including two Seersucker anti-ship missiles and a suspected Scud, which was shot down by Patriot missiles.
There were no reports of casualties.
Suggestions that the initial strikes came as a surprise to the Ministry of Defence (MoD) were rejected by Mr Hoon.
He said Britain had been "well aware of the target", adding that there was "full openness and consultation between the alliance members".
Downing Street said Tony Blair had been alerted to the strikes on Baghdad just after midnight (GMT).
The prime minister and key ministers of the war cabinet met at Downing Street on Thursday morning and a full cabinet meeting followed.
British experts at Central Command have been assessing the impact of the overnight air strike on five senior members of Saddam Hussein's regime in Baghdad.
Just before the war began, British troops were warned some might not make it home.
"There may be people among us who will not see the end of this campaign," said Lieutenant Colonel Tim Collins, commander of the 1st Battalion of the Royal Irish.
"We will put them in their sleeping bags and send them back. There will be no time for sorrow."
He urged troops to behave like liberators not conquerors, saying: "If you are ferocious in battle remember to be magnanimous in victory."
Some units have been told not to fly Union Jacks or St George's flags in order to emphasise that point.