US prepares for final offensive in holy city

US forces last night showed signs of preparing for what they hoped would be a final assault on the Najaf stronghold of Shia insurgents loyal to Muqtada Sadr as the battle for control of the city entered its eighth successive day.

As Iraqi police manned checkpoints to stop movements between the north and the south of the city and US forces moving forward to secure sections of Najaf's ancient cemetery came under mortar attack, the US military said it was conducting joint exercises with the Iraqi national guard ahead of a major offensive.

Col Anthony Haslam, the commanding officer of the 11th Marine Expeditionary Unit, said: "Iraqi and US forces are making final preparations as we get ready to finish this fight that the Muqtada militia started."

Yet, there were indications that the assault had been temporarily delayed when US Marine Major David Holohan declared: "Preparations to do the offensive are taking longer than initially anticipated. It doesn't matter now, they know we're coming," he added.

The senior health official in the city, Falah al-Mahani, said the deteriorating situation was causing a "real catastrophe" for health services. Eighteen of his staff had been injured in the fighting and "ambulances are prevented from reaching injured people by the clashing parties. Our staff are not able to reach their hospitals. We are paralysed," he said. During the day sporadic fighting continued in the Wadi al-Salam cemetery after insurgents reportedly installed mortar positions near the sacred Imam Ali shrine and burned tyres in the streets outside the mosque compound. Captain Patrick McFall, from the 1st Cavalry Division, said: "We keep pushing south and they just keep coming."

The US military said that helicopter gunships had on Tuesday bombarded a multi-storey building 400 metres from the shrine and about 20 people were killed inside the building. The military said on Monday that 360 insurgents had been killed since the fighting began on Thursday of last week and gave no figures for civilian casualties. Spokesmen for Sadr say the figure is much lower.

Military officials had earlier said that Sadr's forces had been pushed towards the city's mosque compound and were using a large underground parking complex close to the mosque as a base and weapons depot. In a statement to his gunmen Sadr declared: "I hope you keep fighting even if you see me detained or martyred."

The first sign of tension within Iyad Allawi's interim government over the joint Iraq-US operation came as one of the country's two deputy Presidents said in an interview transmitted from London by the Arab satellite network al-Jazeera, whose journalists were banned from operating in Iraq by the government last Saturday: "I call for multinational forces to leave Najaf and for only Iraqi forces to remain there."

And as fighting continued to spread to predominantly Shia southern areas and the huge Baghdad suburb of Sadr City, the health ministry said that at least 30 Iraqis had been killed and 219 wounded in five cities including the capital. Medics in Sadr city reported that 20 people had been killed and a witness reported seeing the coffins of four children. Residents reported late yesterday afternoon a heavy presence of US forces.

In Kut, 100 miles to the south East of Baghdad, four people were killed as Iraqi police fought off attacks by Sadr's Mahdi Army on government buildings and a police station, Meanwhile overnight fighting in the Southern city of Amarah where British tanks were seen patrolling the streets killed 14 people including "many" militants and injured 42 according to health ministry officials. British troops suffered two minor casualties. Amid mixed signals about the timing of a final thrust, some diplomatic sources in Baghdad predicted that Mr Allawi would stay his hand before authorising a full scale assault on the Najaf insurgents in order not to raise the temperature of an Iraqi national conference planned for the weekend to elect representatives of a new interim national council to scrutinise the new government. Several groupings -al-Sadr's among them-are boycotting the conference.

A spokesman for Ahmad Chalabi, the Iraqi politician once most favoured by the Pentagon who returned yesterday to face possible arrest on charges of counterfeiting linked his arrival in the country with unrest by saying that the Iraqi National congress leader was "back among his people after trying to get some rest before returning to his duties and trying to help the government to stop the violence."

Meanwhile, a website used by Islamic militants carried a video on Wednesday purporting to show militants beheading a "CIA agent" in Iraq.

The four-minute long footage showed a Western-looking man sitting on a chair surrounded by armed masked men. One of the men struck the captive's neck repeatedly with a sword, severing his head amid shouts of "Allahu Akbar" (God is greatest).

The Web site did not say which group issued the video, nor did the masked men identify themselves or make any political statements as previous kidnappers in Iraq had.

Scores of hostages have been kidnapped by armed groups. Some have been freed but at least nine have been killed.