Shi'ite militiamen battled US and Iraqi forces in the holy city of Najaf today, resuming hostilities after yesterday's collapse of peace talks aimed at ending ten days of fighting.
Witnesses said loud explosions and automatic gunfire echoed from near an ancient cemetery in the heart of Najaf, a key stronghold for the militia loyal to radical Shi'ite Muslim cleric Moqtada al-Sadr.
US tanks moved close to the area near the cemetery and the sacred Imam Ali Mosque, prompting frightened residents to stay indoors.
But it appeared US and Iraqi forces had yet to resume a full-scale offensive against the militiamen.
The fighting has killed hundreds in Najaf and spread to seven other cities in Iraq, presenting interim Prime Minister Mr Iyad Allawi with his toughest challenge since he took power from US-led occupiers on June 28th.
Sadr has vowed to fight to the death, winning support from many Iraqis incensed at the US military operations in the country's holiest Shi'ite city.
Thousands of protesters from other parts of southern Iraq have streamed to Najaf and joined Sadr in the mosque, promising to act as human shields should an attack take place.
Meanwhile militants fired mortars at a meeting where Iraqi leaders met to pick an interim national assembly today, killing at least one in the attack.
The Interior Ministry said three mortar bombs hit a taxi and bus station on the edge of the heavily fortified Green Zone in Baghdad, a few hundred metres (yards) away from the conference centre, also wounding 17 others.
The three-day conference, attended by 1,300 delegates, was not affected and sessions proceeded as planned, although many delegates were startled as windows shook.
The attack, despite massive security, curfews around the zone, checkpoints and blocked streets illustrates Iraq's nightmarish security as politicians and religious leaders try to plot the country's stuttering road to democracy.
The Health Ministry said one person was killed and 17 hurt.