British troops are firing in support of what they believe is a civilian uprising in the southern Iraqi city of Basra, it is reported.
Troops have had to battled with sandstorms
Artillery fire was being used to knock out loyalist Iraqi mortar positions which were attacking civilians, ITV news reported, quoting intelligence officers with the Scots Dragoon Guards.
The size of the insurrection is currently unknown, said GMTV reporter Richard Gaisford. Loud explosions have been heard coming from the city.
There has been confusion over whether many civilians in Basra and the Shia south welcome the arrival of coalition forces or still fear pro-Saddam troops and agents.
British forces spokesman Colonel Chris Vernon said there were estimated to be about 1,000 Fedayeen irregulars in the city, with Iraqi regular army strength unknown.
UK troops had indicated they were changing their tactics as they preyed on Iraqi forces in the southern city of Basra.
The city has been designated a "military objective" after fierce resistance from Iraqi irregulars.
The move came after Britain's second soldier to be lost in combat - from the 1st Battalion The Black Watch - was killed in nearby al-Zubayr on Monday night.
British troops were carrying out "surgical" raids on political and military targets, while taking every opportunity to pounce on Iraqi armour on the fringes of the city.
But sandstorms - which have spread across much of Iraq - hampered many operations as flying helicopters becomes dangerous and tank sight visibility drops.
In Basra on Monday night, lightning raids on two Baath party offices saw one official captured in a move to "delink the oppressive structure from the people", said British forces spokesman in Kuwait Colonel Chris Vernon.
The new tactics aimed at prising the city - with a population of 1.5 million - from the grip of the Iraqi regime come as a humanitarian crisis looms, Colonel Vernon said.
About 100,000 children could be at risk of disease after the water supply to the city was disrupted, according to a UN spokesman.
Red Cross engineers are battling to fully restore the local water pumping station by the end of the day.
They believe many are being forced to drink dirty river water, with no more than 40% of residents having access to piped water.
The BBC's Tim Franks, who is on the Iraq-Kuwait border, says Iraq is reinforcing the city from the north and fighting there is intensifying.
British forces south of Basra, meanwhile, have blocked an attempted breakout by up to 35 Iraqi vehicles, including tanks, seeking to press southward.
Military sources told the BBC British light tanks, helped by small helicopter gunships and surveillance helicopters, had destroyed about 20 of the Iraqi vehicles.
It is thought they could have been trying to re-take the al-Faw oil peninsula, which British marines have been holding for several days.
The BBC's Paul Adams, in Qatar, says there is anxiety among the troops that the bad weather is encouraging Iraq snipers to approach convoys.
The southern Iraqi port of Umm Qasr is now secure after pockets of resistance were overcome, said British military spokesman Group Captain Al Lockwood.
He told the BBC humanitarian shipments could flow through the town within about 48 hours, once mines were cleared from the waters.
International Development Secretary Clare Short said on Tuesday the UK was pledging another £30m in aid to be used immediately in Iraq.
The funds will be given to the Red Cross and Red Crescent who are already operating in Iraq, Ms Short told BBC World Service.
Elsewhere, several hundred British Royal Marines have been deployed along Iraq's southern border with Iran, amid concerns fighters there could try to exploit uncertainty caused by the war.
In other developments:
The first British soldier to die in combat has been named as 33-year-old married father Sergeant Steven Roberts, from Bradford in West Yorkshire
Two British soldiers injured in battle - one Royal Marine Glenn McCoy from Donnington in Telford, the other unnamed - have been flown to Birmingham's Selly Oak hospital for treatment. Their condition is unknown
An ICM poll for the Guardian newspaper shows 54% of people questioned said they approved of attacking Iraq to remove Saddam Hussein, with 30% against
UK commander Group Captain Mike Harwood warned that the Iraqi air force could be planning a surprise chemical attack