Iraq's most revered Shia leader persuaded a rebel cleric on Thursday to accept a deal ending a three-week uprising in Najaf, after returning to the holy city amid bloody clashes that killed at least 74 people.
Ayatollah Ali al-Sistani entered the city in a huge convoy of vehicles, with thousands lining the streets along the route, for talks with radical rival Moqtada al-Sadr.
Police said Sadr, whose fighters have been holed up in the sacred Imam Ali mosque and battling US and Iraqi forces in the alleys outside, agreed a "very positive" deal to end fighting that has killed hundreds, driven oil prices to record highs and undermined the authority of Prime Minister Iyad Allawi.
Details were due to be announced at a Najaf news conference.
Tens of thousands of Shias had converged on Najaf, heeding calls by Sistani and Sadr to march on the city.
At least 15 Sistani supporters were shot dead in Najaf and 65 wounded when gunmen opened fire at police who were trying to control a crowd, prompting police to shoot back, witnesses said.
"Suddenly armed men joined our group and fired at the police. The police started firing everywhere," witness Hazim Kareem told Reuters at Najaf's hospital, where bodies dripping with blood were piled on stretchers.
A hospital worker added: "Go look at the morgue, it's full."
In nearby Kufa, a mortar attack on the town's main mosque killed at least 25 Sadr supporters as hundreds of his men inside prepared to march on Najaf, officials said.
Shia marchers were fired on in Kufa around the same time and at least 20 were killed, a Reuters photographer on the scene said. It was unclear who carried out the attacks.
Television pictures showed dozens of wounded men lying in pools of blood around Kufa mosque. Fighting in Najaf, however, appeared to have eased as a government ceasefire took effect.
The US military said it had suspended offensive operations at the request of the Iraqi government.
Sistani drove into Najaf from the southern city of Basra in a huge convoy, guarded by dozens of police pickups with their sirens wailing. Scores of police brandished AK-47 rifles as they drove past thousands lining the streets leading into Najaf.
Tens of thousands of Iraqis in cars and on foot travelled to Najaf to welcome him. But Sistani, 73, told them to wait at the city's outskirts.
Aide Hamed al-Khafaf told reporters Iranian-born Sistani's peace plan called for all groups in Najaf to lay down their arms and for US forces to leave the city.
Sistani arrived back from London on Wednesday after heart treatment for three weeks. The uprising erupted just as he left his adopted home in Najaf, Iraq's centre of Shia learning.
Allawi said he had ordered his forces to observe a 24-hour ceasefire in Najaf from 3 p.m. (1100 GMT) to help the talks.
He said Mehdi Army fighters would be offered an amnesty if they gave up their weapons and left the shrine.
"The Iraqi government will provide them with ways to hand in their weapons and leave the sacred shrine, and we affirm again that we will provide safe passage to Sayyed Moqtada al-Sadr if he chooses to stop the military confrontation," Allawi said.
Sistani's followers say the cleric's intervention could break the Najaf deadlock and ensure a peaceful resolution after US firepower failed to drive rebels from the mosque. The elderly cleric ended another uprising in April and May.
Sadr, aged only about 30, has challenged the collegiate leadership of the Najaf clergy headed by Sistani and styled himself as the face of anti-US Shia resistance.