UK forces have fought a day-long battle against hundreds of Iraqi troops, supported by tanks, outside the city of Basra.
The operation was supported by artillery units
Royal Marines, who led the operation supported by other units, said Iraqi fighters in the village of Abu al-Qassib had put up the hardest resistance they had seen so far.
Five senior Iraqi officers, including a general, have been captured and a "strongpoint" overrun, they said.
At one point, a detachment of Royal Marines were also reported to have moved east of the main campaign, in an attempt to trap an Iraqi force of up to 3,000 men in a pincer movement.
Dozens of prisoners of war are thought to have been taken by coalition forces in Sunday's fighting - although reports on total numbers are confused.
Those captured are understood to have been transferred to a camp at Umm Qasr, which already holds about 3,000 POWs.
At least 14 British troops are reported injured - several marines by artillery fire from their own side.
And a Royal Marine has died in a separate operation on one of the Faw peninsula waterways.
In another part of the battle, British helicopters destroyed three Iraqi boats that attacked a British position on the Shatt al-Arab waterway.
The offensive at Abu al-Qassib was described by one British officer as "the marines' largest operation of the war so far".
Codenamed Operation James, after James Bond, it began at 0300 BST UK time with a heavy artillery barrage.
The Royal Marines were supported by 14 Challenger II tanks, a similar number of Scimitar armoured vehicles and Commando-trained Royal Engineers.
British Army officials said the operation was designed to encourage Saddam Hussein's opponents in Basra to rise up, and to show that they were serious about taking the city.
The suburb is home to around 30,000 people.
"The planning assumption had always been that the advancing coalition forces would simply sweep past Basra and it would implode by itself," Brigadier Jim Dutton, commander of 3 Commando Brigade, said.
"It became apparent to me that we could do more than that, to get the message across that we can go in there and get rid of the regime.
"It could have a remarkable effect on the rest of the city and that is why
the go ahead was given for the operation."
UNITS IN ABU AL-QASSIB BATTLE
40 Commando Royal Marines
59 Independent Commando
Dragoon Guards (tanks and armoured vehicles)
1(UK) Armoured Division (artillery)
According to a reporter attached to the unit, three rifle companies, each consisting of more than 120 men, advanced on foot
at first light along a wide front of territory aiming to trap Iraqi forces up
against the Shatt Al-Arab waterway.
To the east and the west blocking positions were set up.
As Marines from 40 Commando advanced they were engaged many times by enemy snipers and from bunker positions.
According to Lieutenant Colonel Gordon Messenger, commanding officer of 40 Commando, the civilian population of Abu Al Khasib was "generally welcoming" to the coalition forces.
However, despite the strides made in the earlier part of the day - when 35 sq km (21.7 square miles) of territory was cleared - they were said to be meeting determined resistance closer to the city of Basra.
By sundown a "consolidation position" had been set up and the operation, which marines had hoped would last only a day, will continue into Monday.