Breaking the rule of the Baath party in Basra is now the British military's "primary focus", say UK army officials.
British troops take a break from lightning raids into Basra
UK troops made their furthest incursions yet into the southern Iraqi city on Saturday, in a lightning raid on key targets.
Tanks made strikes in the centre of the city, reportedly destroying the headquarters of pro-Saddam paramilitaries, a communications mast and two statues of Saddam Hussein.
Military leaders said they were targeting Baath party headquarters and US troops had captured a senior party official.
Meanwhile, a UK soldier is reported to have been killed and others injured in a 'friendly fire' incident near Basra.
The soldier would be the fifth member of UK forces killed by coalition colleagues since the war began.
Reports say the soldier died when an American A-10 Thunderbolt attack aircraft targeted two armoured vehicles on Friday.
The Ministry of Defence would only confirm an incident was being investigated and that a soldier was missing, presumed dead.
On Saturday, British military spokesman Colonel Chris Vernon said breaking the Baath party's rule in Basra was the main focus of the British military.
"Targeting and eradication of the Baath party is now the critical effect we need to achieve," he said.
Previous reports of an uprising in Basra appear to have been misplaced, but Colonel Vernon stressed that persuading Basra residents to rise up independently remained the aim.
And that aim was being realised, he claimed.
"Slowly but inexorably, the wedge between the people and the oppressors runs deeper with the inevitable end state of the removal of oppression and control of the people of Basra and its surrounding province," he said.
He said UK attacks on Baath party targets and the reported capture of a senior official had "rocked their confidence" and further assaults using armoured infantry would continue "as we determine".
Patrolling British troops were "trying to win the people over" and humanitarian aid was helping, he added.
UK military spokesman Group Captain Al Lockwood said there were indications the population was seeking to co-operate with British troops.
"More and more of the civilian population are talking to us and assisting with this little battle that we have on our hands," he said.
He told BBC Radio 4's World at One that coalition forces were not currently contemplating a major assault to seize the city.
"We have a large number of options and we are using them very carefully to do what we can to liberate that city," he said.
He rejected suggestions that efforts to limit civilian casualties had restricted their military effectiveness.
"It is not only the civilians of Basra we have great concern over, and the infrastructure in that city, it is also our own troops," he said.
"We don't want to push them into areas of danger.
"Therefore, we are using every asset we have to make sure we have the complete picture before we move in."
Earlier, defence officials denied reports that four or five British soldiers had been kidnapped in Basra overnight.
Speaking of the reported 'friendly fire' incident, a spokesman in London said it had involved a group of British light armoured vehicles belonging to D Squadron The Blues and Royals, Household Cavalry Regiment, based in Windsor, Berkshire.
The regiment's commanding officer, Lieutenant Colonel Mark Van Der Lande, said: "We have been informed that one soldier is missing, believed killed, and four have been wounded.
"The squadron was in action at the time but it is suspected this may have been a blue on blue [friendly fire] incident."
Colonel Van Der Lande said a full investigation was underway, but the full facts had yet to emerge.
He said next of kin had been informed and asked that the families and regiment be left to grieve in peace.
"We are professional soldiers and our job carries risks, but any loss is a bitter blow," he added.
The death takes the total number of UK personnel killed in the conflict so far to 23.