The leader of the Iraq Shi'ite militia Asaib al-Haq said kidnapped British bodyguard Alan McMenemy had been killed in a clash with his abductors and the group was willing to turn over his body without conditions.

McMenemy was kidnapped by Asaib al-Haq, or Leagues of Righteousness, along with computer programmer Peter Moore and three other bodyguards in 2007. Moore was released in 2009 and the bodies of the three bodyguards were returned then.

Qais al-Khazali, a Shi'ite cleric who leads the militia, said the four guards were killed when they tried to escape from their captors. He did not say when the escape attempt took place.

The brothers told me that those four bodyguards tried to escape ... They took advantage of a negligent moment and took the weapon of one of their guards and the clash ensued and led to this result. We honestly are sorry for that incident, Khazali told Reuters in an interview on Wednesday.

Peter Moore was in another place. They (the kidnappers) knew how important he was and they were expecting a raid or something else. In addition to that, Peter was a civilian and they knew that it was unexpected that he would be any kind of risk.

But the confrontation happened with the four guards and led to all of them being killed.

Asked why Asaib had not returned McMenemy's body to his family - leading to speculation that the guard was still alive - Khazali said the militia was prepared to hand over the remains unconditionally.

We have no problem. We have been ready to hand him over for a while. We have no specific demand to hand him over and we have no problem in handing him over. It is a logistical issue.

Britain's Foreign Office said it was aware of the report on Asaib al-Haq's offer.

It has been a horrendous ordeal for everyone involved. We are working with the Iraqi authorities and others to bring this matter to resolution, said a Foreign Office spokeswoman, adding that the family would not issue any response.

Asaib al-Haq splintered from the Mehdi Army militia of anti-American Shi'ite cleric Moqtada al-Sadr. It was long believed to be behind the kidnapping of Moore and his guards, who were taken from a Finance Ministry building in downtown Baghdad at the height of the sectarian violence unleashed by the U.S. invasion.

Khazali said the militia was also responsible for a sophisticated 2007 attack in which five U.S. soldiers were killed in the city of Kerbala. Guerrillas posed as Americans, wore uniforms similar to U.S. troops and carried U.S.-type weapons to get past Iraqi security checkpoints.

U.S. officials say the militia is funded by Iran.

A final answer on the fate of McMenemy, who along with the other bodyguards worked on a contract for Canadian security firm GardaWorld, would mark an end to the longest hostage saga involving Britons since the Lebanese civil war in the 1980s.

(Writing by Jim Loney; Editing by Angus MacSwan)