The helicopter burst into flames on impact and a thick cloud of black smoke billowed into the air. Hundreds of youths quickly surrounded the area, yelling and pelting British troops cordoning off the crash site with rocks.

"A multinational forces helicopter was hit by a rocket and went down on houses in central Basra, " Basra police spokesman LieutenantColonel Kareem al-Zaidi said, adding there were no casualties on the ground.

Britain's defence ministry confirmed one of its helicopters had gone down, but would not comment on the cause, saying it was under investigation.

"There have been some casualties, " Major Sebastian Muntz said from Basra, 340 miles south of Baghdad. He could not say how many casualties, nor give details of the type of helicopter or number of crew.

A British military spokeswoman in Basra denied saying earlier that a missile had brought the aircraft down.

Military sources said, however, it seemed likely the helicopter was shot down.

In January last year, 10 British aircrew died when their Hercules transport plane lost its wing and crashed just north of Baghdad after small arms ground fire had set a fuel tank ablaze.

Meanwhile, a US military helicopter crashed while on combat operations in eastern Afghanistan, killing all 10 US service members on board, the military said yesterday.

The CH-47 Chinook crashed late on Friday near Asadabad, the capital of Kunar province.

The US military said the crash was not a result of enemy fire although Taliban insurgents claimed they shot it down.

"The remains of 10 servicemen were found in the aircraft. There were no survivors, " said spokeswoman Lieutenant Tamara Lawrence.

All 10 were American.

The cause of the crash was being investigated but there was "absolutely no indication" it had been brought down by hostile fire, Lawrence said.

The United States has more than 19,000 troops in Afghanistan.