The Shatt al-Arab is Iraq's main access to the Gulf

Mr Waili said one Iraqi coastguard was killed, but this was not confirmed by other Iraqi officials.

The Iranian embassy in Baghdad has denied any knowledge of the affair.

"The reports of this incident are untrue," a spokeswoman for Iranian Charge d'Affaires Hasan Kazemi-Qomi said.

Nevertheless, the commander of the Iraqi regional border force, Brig-Gen Abbas Musawi, called on Iran to free the men immediately.

THE SHATT AL-ARAB 120 miles of tidal waterway Formed by Tigris and Euphrates rivers Subject to 1639 Persian-Ottoman treaty Southern stretch forms border between Iraq and Iran River is vital trade route for both countries Control of river one of disputes causing Iran-Iraq war in 1980

"We call on the Iranian authorities to free the coastguards who were captured while conducting legitimate work on the Iraqi side of the Shatt al-Arab," he told the AFP news agency.

The clash occurred when Iraqi coastguards boarded an Iranian boat, called Nur 1, smuggling oil 45km (27 miles) south of Basra, Gen Musawi said.

"When the guards mounted the boat, they saw that the captain was an Iranian. He alerted the Iranian forces by radio," he said.

Iranian navy speedboats then engaged the coastguards, he added.

Gen Musawi was unable to confirm the Basra governor's claim that one of the Iraqis had been killed.

Disputed border

Formed by the confluence of the Euphrates and Tigris rivers, the Shatt al-Arab is Iraq's main access to the Gulf.

The exact line of the border in the Shatt al-Arab is disputed, and was one of the causes of the Iran-Iraq War in the 1980s.

The two countries signed the Algiers Accord in 1975, which established the border along the thalweg, or line following the deepest part of the river bed.

But, in September 1980 Saddam Hussein's Iraq abrogated the treaty and invaded its neighbour.