US forces in Iraq have threatened imminent assaults on two key towns if guerrillas do not accede to their demands.
American forces encircle both Najaf, the holiest city for Iraq's Shi'ite majority, and Falluja, where Sunni insurgents fought a bloody new round in a three-week battle with US Marines. Eight guerrillas and a soldier died in clashes that damaged a mosque.
US and militia forces also fought near Najaf today.
With the clock ticking down to a formal handover of power to Iraqis on June 30, the US-led occupation authority is racing to extinguish two serious challenges to its military control - while avoiding inflaming Iraqi public opinion.
Officials in Washington said President George W. Bush had asked commanders at Falluja to keep up negotiations. But they may start probing patrols into the city of 300,000 as early as tomorrow, risking serious confrontations.
Paul Bremer, the US administrator in Baghdad who called the situation in Najaf "explosive", issued an ultimatum to Shi'ite cleric Moqtada al-Sadr to withdraw his Mehdi Army militia and its weapons from mosques and schools immediately.
Late today, US forces clashed with Sadr's militiamen outside Najaf, south of Baghdad, leaving several Iraqi vehicles burning, witnesses said. There were no reports on casualties.
"The Coalition certainly will not tolerate this situation. The restoration of these holy places to calm places of worship must begin immediately," Bremer said in his written statement.
His spokesman, Dan Senor, said a Geneva Convention bar on attacks on such sites would not apply if they were used for military purposes. He declined to say precisely how US forces would respond if Sadr, who is wanted for murder, did not comply with the demand to clear weapons and militiamen from mosques.
The cleric's popularity is not universal, but any military action in Najaf would inflame Shias in Iraq, where the long-oppressed majority largely welcomed the toppling of Saddam Hussein, as well as elsewhere in the Middle East, notably in Shi'ite-ruled Iran.
In Sunni Falluja, long loyal to Saddam, US forces have also been largely holding back since launching a crackdown three weeks after the murder and mutilation of four American security guards. Local doctors say 600 people were killed. That has angered many fellow Arabs.
US patrols, alongside Iraqi forces, would begin in Falluja "as early as tomorrow", Brigadier General Mark Kimmitt, a military spokesman for the authority, told a news conference.
Guerrillas, who may number up to 2,000 and include 200 or more foreign militants, have until tomorrow to hand in heavy weapons. After two weeks of a much abused ceasefire and Monday's fighting, which involved guerrilla rocket attacks and US air strikes, there seems only a slim chance of that.
"We certainly hope that there is an epiphany on the part of the belligerents in Falluja tonight to recognise there are two tracks," Kimmitt said. "There is...a peaceful settlement or there is a settlement achieved by force of arms. Their choice."
He said, however, the moment for action would be up to the US commander on the ground and training and other preparation among the Americans and Iraqis charged with retaking the dangerous streets of Falluja might take some time yet.
In Baghdad, two US soldiers were killed when a chemical store blew up during a raid that appeared may have involved specialists engaged in the hunt for Saddam's elusive chemical and biological weapons. Kimmitt said the troops were acting on a tip that chemicals were being sold to militants.