For the past few weeks, about 600 militants from the Ansar al-Islam have battled a Kurdish peshmerga force of 5,000 from the Patriotic Union of Kurdistan (PUK), London's Daily Telegraph reported from Iraq.

The fierce fighting, in which both sides pounded each other with mortar shells and heavy gunfire, had killed 100 people on both sides.

Some accounts suggested dozens of peshmerga fighters were killed in one battle when an Ansar al-Islam 'suicide bomber' charged at them and blew himself up.

According to the PUK, one of the two dominant Kurdish political parties, Ansar al-Islam is supplied with weapons and money by the Iraqi Mukhabarat, Mr Saddam's intelligence service, to destabilise the region.

The peshmerga commander of the area, Sheikh Jafar Mustapha, says Ansar al-Islam has killed 130 of his men and 20 local villagers have died in crossfire or by stepping on scattered land mines.

A year ago the Kurdish fighters tried to drive the group out of their mountain strongholds but the Islamists massacred 42 of them by slitting their throats.

Sheikh Mustapha told the Telegraph: 'Usually they don't shoot people; they like to use swords and knives.

'When they capture one of our peshmergas they cut him into pieces.'

The original leader of Ansar al-Islam, Mullah Krekar, is in jail in Holland and the PUK said the group is now led by Abu Abdullah Ashafi, a low-born Kurd who joined the Iraqi army in the 80s before turning to Islam and spending four years in Afghanistan.

As many as 40 of Ansar al-Islam's fighters are Arabs, Iraqis and others washed up from the Afghan melee.

According to the Kurdish newspaper Hawlati, Ansar al-Islam's leader, Abu Abdallah al-Shafei, was killed in the recent fighting with the PUK but there was no confirmation of the report.

The group's profile seems to be that of a band of itinerant guerillas fighting their own ideological battles for Islam aided by other groups.

There are some suggestions that Ansar al-Islam, who operate right on the Iranian border, are supplied through Iran.

The old enemies, Iraq and Iran, are on paper, strange co-conspirators, but Iran, like Turkey and Syria, remains extremely wary of a strong Kurdish state bordering its own Kurdish populations.

One senior official of the Democratic Party of Kurdistan or KDP, told the Telegraph: 'There are links with Al-Qaeda but I cannot say that Ansar receives orders from Al-Qaeda.'

They suspect the connection has been manufactured to encourage American help and involvement. The Americans have stayed away.

On the ties between Mr Saddam's secret army and the Ansar, the KDP official said: 'They co-operated now and then but secretly. But Ansar does not always carry out the operations the agents ask them to. Sometimes they take the money and do not deliver.'