Baghdad: Iraqi authorities say 12 terrorist detainees disguised in police uniforms have escaped from a prison in the southern port city of Basra.

An Iraqi intelligence official and a Basra policeman said the Friday morning prison break happened at a detention centre housed in one of Saddam Hussain's former palaces.

It's not clear how the detainees got the police uniforms but the intelligence official said authorities were investigating whether they had inside help from guards.

The police official said a citywide manhunt for the escapees was ongoing in Basra.

Basra is Iraq's second-largest city and is located  550km southeast of Baghdad.

Both officials spoke on condition of anonymity because they were not authorised to brief the media.