"About 150 families have left eight villages. We are very concerned about the situation in the area. If the shelling continues, we may have to declare an emergency situation," said Hussein Ahmed, governor of Qalaa Diza district.

"There was artillery fire in Haj Umran today on Mount Qandil. Two shells fell in the night," said local governor Ahmed Qader.

An Iranian helicopter crashed in the Qandil Mountains near the border on Saturday. Rebels claimed it was hit when it landed on landmines planted on the Iranian frontier, whereas Tehran says it crashed in bad weather.

Whatever the reason for the crash, which reportedly killed six members of Iran's Revolutionary Guard, it seems to have triggered more intense fighting.

Kurdish villagers living on Mount Qandil have fled their homes, trekking down the mountain on mules to the relative safety of makeshift tents in the valley outside the range of Iranian artillery.

Jhader Watman, a 57-year-old shepherd, said he and his family of eight rescued what they could and walked for two days and two nights to the valley stream after shell fire destroyed their home in Sheikh Eish, on Mount Qandil.

He admitted his village shelters fighters from the banned Kurdistan Workers' Party (PKK), a rebel group mainly active in neighbouring Turkey.

"The PKK were hiding the same way we were hiding, but warned us beforehand that our village may be shelled. When we were shelled, the PKK returned fire with machine guns and Kalashnikovs," he said.

"I was breaking bread when the shelling started. I ran. My house was hit and destroyed. We salvaged what we could. One son took the sheep and ran. We followed carrying what we could, food and bedding," said Aman Amed, 57.

Sipping her tea under a simple canvas tent, as dusk drew in, she remembered the hardship of being forced out of the village at the time of ousted Iraqi dictator Saddam Hussein who brutally repressed the Kurds.

"Because Saddam destroyed our village, I delivered my children in a cave and now perhaps it will be the same. Perhaps I'll see children delivered in this valley," she said.

The family sold off sheep and scraped by with donations from friends who raised 1,000 dollars, which they said they had used to pay for an operation on 18-year-old shepherd Rafur Sura, hit by falling rock during the shelling.

Local PKK commander Mizen Amed said the guerrilla group had declared territory under its control out of bounds to visitors.

"Since August 14, Iranian forces have been shelling and attacking the PJAK (Party of Free Life in Kurdistan)," she said, referring to a PKK offshoot based in northern Iraq and dedicated to carving out a Kurdish homeland in Iran.

Amed met journalists in a stone house well behind rebel lines in the remote Qandil Mountains in Iraq's autonomous Kurdish region.

"Because of what has happened in the last few days, forces near where there are operations are more active. Forces a little further away have stopped work such as education and training," she said.

"Wherever an operation takes place, our forces close to those areas have mobilised. Everybody becomes active," she said.

The PKK, which frequently allows journalists to visit their training camps and guerrilla units operating on Mount Qandil on the Iran-Iraq border, denied access to AFP, saying they were unable to guarantee vistors' safety.

"We are not letting anyone inside the zone because of developments, because it became a war zone and we cannot take responsibility," Amed said.

"Guerrillas are constantly on the move and shells have fallen close to where PKK personnel stay," she said, describing shelling in places as "very heavy".