THE strongest evidence of links between Saddam Hussein and Osama bin Laden has emerged with reports that the Iraqi dictator is supporting former al-Qa'eda fighters who have established a Taliban-style enclave in Kurdistan.

Members of Saddam's Republican Guard have been seen in two villages run by militants from Ansar al-Islam inside Iraqi Kurdistan, an area which is otherwise controlled by anti-Saddam factions.

 They were sighted by Western military advisers on a reconnaissance mission. Any confirmed collaboration between Baghdad and bin Laden would be seized upon by President Bush to garner support for action to oust Saddam's regime.

Many members of Ansar al-Islam, a radical Islamic cell, are Arabs who fought with the Taliban and al-Qa'eda forces in Afghanistan. Their numbers are believed to have been boosted recently by men fleeing the US military's recent Operation Anaconda in eastern Afghanistan. The group was said last month by Kurdish military intelligence to have received about £200,000, plus weapons and Toyota Land Cruisers, from the al-Qa'eda network.

Surface-to-air missiles and other weaponry from Iraq are also said to have been delivered to the mountainous region near the town of Halabjah, in northern Iraq.

The enclave was seized by the Islamic militants from territory controlled by the anti-Saddam Patriotic Union of Kurdistan (PUK). The Iraqi leader has reportedly dispatched some of his best troops to bolster Ansar al-Islam, despite a long-term hatred of Islamic fundamentalism, because the group is opposed to his enemies in the PUK.

"Five large trucks coming from Jalawla [in Baghdad-controlled Iraq] unloaded arms and weapons in the Halabjah area," said one witness. "They were taken to hides and caves in the mountains." The haul is said to have included machine-guns, anti-personnel mines and C4 plastic explosive.

Since the beginning of March about 750 Ansar al-Islam fighters have apparently amassed in the two villages, al-Talweera and Biyara, where television, music and portraits have been banned under rules similar to those imposed by the Taliban.

Local people fear that the Republican Guards will be working with Ansar al-Islam, originally known as Jund al-Islam (Soldiers of God), to crush any uprising and foment unrest.

Hoshyar Zebari, a senior official of the Kurdish Democratic Party (KDP), which shares control over Kurdistan with the PUK, said there had been a change in Saddam's thinking in the past five years. "Ansar are local, home-grown Islamic terrorists, inspired by al-Qa'eda and bin Laden. They think the main enemy is the US and that Islam can't be free unless they get rid of blasphemous groups and infidels, which they consider the KDP and PUK to be."

Carole O'Leary, a professor of Middle Eastern studies at the American University in Washington, said Saddam's supporting Ansar al-Islam would be consistent with his desire to destabilise the Kurdistan regional government.

"It is very clear that this 10-year-old de facto autonomous region is a slap in the face for his leadership," she said. "What's more, it's linked with America in his mind because he sees the US footprint all over the region. By creating unrest, he can put a quarter of his population on notice that he is still pulling the strings and can act against them or not, depending on how they behave."

Ansar al-Islam was established last year after a number of splinter groups broke away from the more moderate Iranian-backed Islamic Unity Movement of Kurdistan (IUMK). They merged and declared jihad, or holy war.

The group's manifesto said that its members had spent the past few years preparing "to carry out the sacred duty of jihad by attending military and religious training camps and stockpiling arms and ammunition".

Links between Ansar al-Islam and Saddam were also alleged recently by Qassem Hussein Mohamed, who claims that he worked for Baghdad's Mukhabarat intelligence for 20 years. Saddam had clandestinely supported Ansar al-Islam for several years, he said. "[Ansar] and al-Qa'eda groups were trained by graduates of the Mukhabarat's School 999 - military intelligence."