One of the Royal Scot's tanks

It is believed to be the largest tank battle involving British forces since WWII.

The engagement on Thursday morning is understood to have taken place when the Iraqi tanks - thought to be Russian-built T55s - began moving south out of the city towards the Al-Faw peninsula.

They were met by a similar number of British Challenger 2s from the Royal Scots Dragoon guards.

All the Iraqi tanks were destroyed in the fighting that followed.

A military source said: "It was 14-0."

The cavalry regiment is also said to have overrun two Iraqi infantry positions.

Soldiers have established a strong foothold

The battle happened as troops from the Scottish Black Watch regiment prepared to distribute humanitarian aid to the population of al-Zubayr, south of Basra.

The Black Watch has established a strong but not yet secure foothold in the militia base, in the south-east of Iraq.

The Herald's reporter Iain Bruce was with the Black Watch on Wednesday when it entered into the "secure lodgement" where troops were greeted by cheering crowds asking for water.

He said that the entry was cut abruptly short when a sniper opened fire and two mortar bombs landed nearby.

Fierce opposition

"A crowd of several hundred scattered in panic, running in every direction to escape the bullets and mortar bombs which followed in rapid succession," he said.

Delta Company of the Scots unit had fought their way into the town early on Wednesday against fierce opposition, which they thought had collapsed under the fire of their Warriors' 30mm cannon and chain guns.

The decision to enter the town, believed to be the nerve centre of guerrilla activity in the south east of the country, was taken after intelligence reports that large numbers of young men of military age were trying to flee north to Basra in a fleet of minibuses.

Intelligence sources also identified but did not name the Iraqi commander who recaptured Basra after its seizure by Iranian revolutionary guards during the 1980-88 war between the two countries.

He is thought to be the organiser of sniping and rocket attacks that have killed one Black Watch soldier and wounded several others in the British sector in recent days.

The Jocks have now established vehicle checkpoints on all roads out of al-Zubayr while infantry clear the last pockets of resistance.

The Black Watch's Bravo Company had earlier been shelled and its men forced to withdraw temporarily from positions overlooking Basra.

The battle group is now poised to enter Iraqi's second largest city, possible as soon as Thursday.

Meanwhile, ships carrying aid were held up after a mine was found outside the port of Umm Qasr.

The discovery has pushed efforts to dock back by 24 hours.

Minesweepers from the Clyde naval base at Faslane have been involved in operations to clear the channel.