Police and health workers said at least 12 people were killed in the fighting in districts of central and northern Basra where Shi'ite cleric Moqtada al-Sadr's Mehdi Army has a strong presence.
Last month Muqtadr Al Sadr re-issued a cease fire for the Mehdi Army, extending a six month cease in fighting that began in August of 07. This has been the primary reason for the reduction in violence in Iraq. There is word and evidence it is unraveling.
"There are clashes in the streets. Bullets are coming from everywhere and we can hear the sound of rocket explosions. This has been going on since dawn," resident Jamil told Reuters by telephone as he cowered in his home.
Sadr's main complaint is U.S. and Iraqi forces exploited the cease fire to carry out indiscriminate arrests. In a statement read out by a senior aide on Tuesday, Sadr called on Iraqis to stage sit-ins all over Iraq and said he would declare a "civil revolt" if attacks by U.S. and Iraqi security forces continued. He also threatened a "third step", but said it was to early to announce what it would be.
Sadr's followers launched what they called "a civil disobedience campaign" in Baghdad on Monday, forcing store-owners to close in several districts.
Pro-Sadr students forced Mustansiriya University in Baghdad to close on Tuesday. Members of Sadr's movement said the protest would spread to other towns and cities from Wednesday.
Police sources said Sadr supporters seized control of five districts in the southern town of Kut on Tuesday after clashes between gunmen and police.
In Baghdad, U.S. and Iraqi forces sealed off the Mehdi Army stronghold of Sadr City, a sprawling slum of 2 million people, after the militia ordered police and soldiers off the streets.
Police said fighting erupted in several Sadr City neighbourhoods between Mehdi Army fighters and the Badr Organisation, the armed wing of a rival Shi'ite faction.
Baghdad's Green Zone, the government and diplomatic compound, was hit by several salvoes of rockets during the day. U.S. military spokesman Lieutenant-Colonel Steven Stover said they had been fired from Sadr City.