Ancient treasures stolen from museums in the anarchic aftermath of the United States-led invasion of Iraq five years ago have been found in Basra, in one of the biggest recoveries of the loot, The Independent can reveal.

The priceless artefacts, about 230 of them, were saved as they were about to be smuggled abroad in a "sting" operation organised by investigators. Seven members of the gang, which is said to have specialised in trafficking the country's stolen antiquities, have been arrested and are being questioned. They are also suspected of being involved in the systematic stripping of archaeological sites.

During the investigation, conducted by Iraqi and British security forces, ancient items destined for private collectors in the Middle East and the West were found buried in gardens and hidden under floors in houses in the suburbs of Basra. According to Iraqi authorities they included Sumerian and Babylonian sculpture, intricate gold jewellery, decorative silverware and ceramic bowls. The artefacts have been sent to Baghdad for analysis and to ascertain their origins.

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Iraq's museums and archaeological sites – including the National Museum in Baghdad, established by the British traveller, writer, political analyst and administrator Gertrude Bell, which opened shortly before her death in 1926 – were plundered as the country descended into chaos. More than 20,000 items, some of the most precious antiquities in the world, went missing.

At the time Dr Donny George, the director of research for the Board of Antiquities in Iraq, went to the Palestine Hotel, where US Marines had set up headquarters, to plead for troops to protect the museum. None were sent for another three days.

Afterwards, Donald Rumsfeld, the US Defence Secretary, described the days of looting and arson in the Iraqi capital as "untidiness", and said of the sacking of the National Museum: "To try to pass off the fact of that unfortunate activity to a deficit in the war plan strikes me as a stretch." Museums in Basra and Mosul, Iraq's second- and third-largest cities, were also looted.

Much of the heritage of of Mesopotomia, the cradle of human civilisation, disappeared as thieves turned to the archaeological sites.

Some of the stolen artefacts were recovered in Iraq and outside the country. The National Museum has recovered around 3,500 of its 15,000 stolen artefacts. But the ferocious violence in Iraq meant that allied and coalition forces and their Iraqi allies did not have the time or manpower to investigate the thefts. But now more efforts are being put in by the Iraqi government to recover the country's plundered cultural heritage, and it is offering rewards for information.

The Basra investigation began after security forces received intelligence that a haul of the treasures had arrived in the city en route for Kuwait. An informant introduced two undercover officers from the Iraqi Army's Quick Response Force – normally a counter-insurgency unit – to the underworld group as agents of foreign buyers who were keen to see what was on offer. The officers were shown artefacts wrapped in newspaper and stored in cardboard boxes. They persuaded the gang that their clients needed to see photographs of some of the items.

Lieutenant Munir Khalid, one of the investigators, said: "The criminals must have known that they were taking a risk by allowing the photography but their greed overcame them and the undercover men used their mobile phones to take photos of the stolen goods. After that it was a question of putting the operation together and making sure that we got all the men and not just the first few we met."

A raid carried out last week in the Abi al-Hassan area led to the arrest of five men and the discovery of 160 items buried in the garden and under stone slabs in the kitchen. A search of another house in Al-Ayaqub led to the recovery of more artefacts buried in a garden, and the arrest of two more men.

The recovered treasure was displayed by the Iraqi security forces on a 15ft-long Formica-topped table at the Shatt al-Arab hotel, which has been used as an army base since the war.

Colonel Ali Sabah, who led the operation, said: "I am very happy because it's my civilisation ... and we have saved some of its history." Picking up a small, delicate amulet he continued: "I am told it's more than 6,000 years old and too valuable to even have a price. We are very proud. When my soldiers go to the museums with their families and see some of these things they can say 'we got them back for our country'."

British soldiers were also involved in the operation. Captain Laurence Roche, of the 20th Armoured Brigade, said: "It really was being in Aladdin's cave with all that wonderful jewellery, sculptures, there was even an oil lamp. It was an amazing privilege just to be there to see it all. It makes you realise just how rich is the heritage of Iraq and the history of mankind is tied up with this place."

Jawad Rashid al-Husseini, an Iraqi arts and antiquities historian, said: "Many of us thought all these things have gone forever. But now we are getting some good news. The Basra find sounds very encouraging, all the items will now have to be examined to verify what they are and classified and returned to their rightful place."