June 30 (Bloomberg) -- America's top general in Iraq last July ordered British troops to prepare to attack Iranian forces that had crossed the border into Iraq, the Daily Telegraph said, citing an unidentified British officer quoted in the Defence Analysis journal.

Lieutenant General Ricardo Sanchez told the British to prepare to send thousands of troops to the border region north and east of the southern city of Basra in order to reclaim territory occupied by the Iranians, the Telegraph said, adding that the unidentified officer disclosed the incident at a conference in London last week.

The incident lasted about a week and had fighting broken out, U.K. forces would have faced attacks by Iranians and Iraqi insurgents, the paper said. Iran's Revolutionary Guard has 125,000 soldiers; 25 percent more than the whole British Army, according to the Telegraph. The situation was resolved when U.K. Foreign Secretary Jack Straw spoke by telephone with his Iranian counterpart, Kamal Kharrazi, the paper said.

A spokesman for the U.K. Ministry of Defence, who declined to be further identified, said the Iranians had established a number of observation posts no more than a kilometer (0.6 miles) into Iraq in the southeastern marshland area. The issue was discussed with all coalition partners, and a number of options were debated, he said. The Americans hadn't ordered Britain to prepare an attack and the situation was resolved diplomatically, the spokesman said.

(Daily Telegraph, 6-30 1)

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.

Last Updated: June 30, 2004 03:50 EDT