PESHAWAR, Pakistan, Aug 16 (Reuters) - Militants loyal to Baitullah Mehsud, the Pakistani Taliban leader believed to have been killed in a U.S. missile attack, have killed 17 fighters from a rival faction in an ambush, Taliban and intelligence officials said on Sunday.

Western governments with troops fighting in Afghanistan will be heartened by the latest sign of rifts among Pakistani Taliban factions since Baitullah Mehsud was killed.

The Mehsud clansmen ambushed vehicles carrying men from Maulvi Nazir Wazir's group in South Waziristan, a tribal region on the border with Afghanistan, late on Saturday night.

"They were hiding behind the rocks and, as soon as our people reached there, they opened fire. It was so sudden and quick that none of our men fired back," Shaheen Wazir, Maulvi Nazir's spokesman, told Reuters by telephone.

An intelligence officer in the region said the attackers also fired rocket-propelled grenades at the pick-up trucks carrying the Wazir fighters towards Wana, the main town in South Waziristan.

A resident saw militants carrying some of the dead bodies into Wana after the attack.

The Mehsud and Wazir tribes are the two dominant clans in a region long seen as a safe haven for the Taliban and al Qaeda.

While Baitullah Mehsud's main focus was on fighting the Pakistani government and security forces, Maulvi Nazir's group has been heavily involved in the insurgency over the border in Afghanistan.

The attack on Maulvi Nazir's fighters is more significant than earlier clashes between Baitullah Mehsud's fighters and men led by two other militant commanders, Turkistan Bitani and Misbahuddin Mehsud.

In March, Baitullah Mehsud had forged an alliance with Maulvi Nazir and a commander in North Waziristan, Hafiz Gul Bahadur.

Pakistani and U.S. government officials are sure that Baitullah Mehsud was killed in a missile strike from a U.S. drone aircraft on Aug. 5. Taliban officials have denied this, but have not offered any evidence to the contrary. (Reporting by Alamgir Bitani; Writing by Kamran Haider; Editing by Simon Cameron-Moore and Kevin Liffey)

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