British soldiers fired rubber bullets to disperse hundreds of former soldiers who hurled rocks and set tires ablaze in the southern city of Basra.

The protesters gathered early yesterday after a British soldier shot dead an armed man in Basra the previous day during clashes with Iraqis who had gathered to collect redundancy payments for being laid off from the Iraqi army.

Ex-soldiers also clashed with U.S. troops for a second day in Baghdad near a payment centre where they are given their $40 compensation for losing their jobs. Around 200 Iraqi men confronted American soldiers, shouting and waving their fists, before being pushed back away from the area.

Violent protests erupted on Saturday at payment centres in Baghdad, Basra and the town of Hilla. Iraq?s U.S.-led administration said supporters of Saddam fueled the unrest by spreading rumors there was not enough money to pay everyone.

Locals in Basra said five people have been wounded yesterday by rubber bullets. Iraqi police arrived to help quell the violence and fired in the air, but fled to a nearby university building after running out of bullets, chased by the crowd.

Mohammed Jasim Abboud, one of the protesters, said former soldiers needed jobs and money. ?We?ve had no wages for a while now?, he said. ?We want our rights like everyone else.?

Guerrilla Attacks

The U.S.-led administration in Iraq disbanded the country?s army in May, sparking several angry demonstrations by soldiers who said they faced destitution in a country whose economy has been battered by war and years of dictatorship and sanctions.

The administration later agreed to make a one-off payment of $40 to around 440,000 former soldiers. Thousands have been queuing daily at payment centres around Iraq to get their cash.

Facing a guerrilla insurgency and mounting financial costs, Washington is trying to agree to a new United Nations resolution giving the world body a broader mandate in Iraq in an effort to coax reluctant countries to provide troops and funds.

At least 85 U.S. soldiers have been killed in action in Iraq since Washington declared major combat over on May 1st.

Security Council members France and Russia say they are unhappy with the draft U.S. resolution. The two countries, which opposed the war in Iraq, want a faster handover of power to Iraqis as a condition for their support.

U.N. Secretary-General Kofi Annan has said the world body could not play a proper political role in Iraq under the terms wanted by the United States.

The United States says the draft resolution may be revised. But it says the transfer of sovereignty to Iraqis cannot be rushed and that a constitution must be drawn up first ? something Iraqi officials say could take more than a year.

Abdel Razzak Hamid