ROME (AFP) - A major police operation in Italy on Friday led to the arrest of 38 people, including almost every member of a southern town council, for alleged mafia connections.

Police swooped on addresses across southern Italy as part of the latest crackdown on corruption in local authorities.

Among those held by police were several council members in the town of Scalea, including the mayor.

Pasquale Basile, head of the town of 11,000 residents since 2010, is suspected of being an intermediary between two rival mafia clans and handing out contracts to mafia firms.

Five out of six of the town's councillors were also arrested, and the head of the local traffic police is being investigated for "criminal association".

There were also arrests in the cities of Bari, Matera, Salerno and Terni as part of the same inquiry, which targeted the network of the Valente-Summo clan of the 'Ndrangheta mafia based in the Calabria region.

Allegations include extortion, kidnapping, fraud and illegal detention of military-grade weapons. Police said they had seized assets valued at 60 million euros (S$99 million) - mainly real estate - during the raids carried out on Friday.

It was the latest action by Italian authorities to clampdown on local government corruption.

The Italian government last year dissolved the city council of Reggio Calabria also in the Calabria region and took over control of the southern city saying it suspected the mafia had infiltrated public utilities.