"More than 200 Iraqis, including women and children, have been injured in the past 24 hours," said Aljazeera correspondent in Falluja, Ahmad Mansur.

American forces initially said those killed in Wednesday's attack on the mosque were fighters taking refuge.

But a marine officer was later forced to admit that US forces had failed to find any bodies.

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Earlier, speaking live from a rooftop, Mansur said the town's hospital was struggling to cope with the rising casualties.

"They are attacking residential neighbourhoods," he said as US warplanes swooped over the area and fired rockets. Intense gunfire could be heard from the streets.

GWEN IFILL: Can I ask you to elaborate on that? We did hear today about an attack on a mosque that killed anywhere from forty to sixty people. Were you with that unit and can you describe what happened?

TONY PERRY: Yeah, I'm with the unit right now. The first reports are a little misleading. What happened here... there are several mosques that have been used by the insurgents as places to either gather or strategize or even to fire at marines.

One particular mosque had thirty to forty insurgents in it. They had snipers. They wounded five marines. There were ambulances that drove up and the marines let them come in to take the insurgent wounded away. But instead, people with RPG's, rocket-propelled grenades, jumped out of the ambulances and started fighting with the marines. Ultimately, what the marines did is call in air power. A helicopter dropped a hellfire missile and then an F-16 dropped a laser-guided bomb on the outside of the mosque, put a huge crater outside the mosque. There's sort of a plaza outside the mosque. And suddenly, the firing inside stopped. But when the marines examined the mosque and went in and went door-to-door in the mosque and floor-to-floor, they found no bodies, nor did they find the kind of blood and guts one would presume if people had died.

Now, one of two things must have happened: Either the people died inside and were carted off somehow-- and there is a tradition of the insurgents carting off their dead very quickly; or two, frankly, they escaped before the bomb was dropped. We cannot confirm that anybody actually died in that mosque. The marines were quite willing to kill everybody in the mosque because they were insurgents. They had been firing at people, at marines. And as the lieutenant colonel who ordered the strikes said, this was no longer a house of worship; this was a military target.

Marines were using aggressive tactics to draw out the insurgents and then chase them.

We demand the occupation forces to heed the voice of reason, deal objectively with events, not to escalate violence that will lead to more bloodshed, and not to resort to the policy of collective punishment that violates all human standards and international charters

U.S. forces called out a weapon rarely used against the Iraqi guerrillas: the AC-130 gunship, a warplane that circles over a target, laying down a devastating barrage of heavy machine gun fire.

One company commander said that as his squads moved through residential areas, they were fired on from inside a mosque, and snipers took potshots at them from numerous hiding places. Many enemy fighters wore black clothing and had scarves wrapped around their faces.

"As soon as we crossed the line, there was a huge change in tone in the people, a real uneasy feeling," the commander said at an early evening briefing. "Little kids made roadblocks."

U.S. ground forces responded with barrages of machine-gun fire, and AH-1 Cobra attack helicopters and AC-130 gunships fired at small bands of guerrillas who immediately dragged away fallen comrades, making casualty counts impossible, U.S. officers said. Sporadic bursts of gunfire and the soft booms of mortar rounds continued all day and into the evening Tuesday.

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But Dickens and other officers said they were under strict orders to avoid inflicting civilian casualties and not to return fire until sources of attack had been pinpointed. "We are not using artillery or big guns," Dickens said. "We don't want collateral damage. . . . The way to win the war on terror is with your boots on deck."

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Despite the fierce armed resistance to the Marine operation and the hostile attitude of some civilians, military officials maintained that most of Fallujah's leaders and residents are not opposed to the U.S. presence and are desperate for the services and investment that have been promised.

U.S. Marines and gunmen were engaged in heavy battles in the Dubat neighborhood on the eastern side of Fallujah and elsewhere in the city, witnesses said.

U.S. warplanes opened fire on groups of Iraqis in the street. Rocket-propelled grenade fire set a U.S. Humvee ablaze, injuring soldiers inside, witnesses said.

Mosques in the city called for "jihad," or holy war, against Americans. Some gunmen in the street were seen carrying mortars, and some women carried automatic weapons

Two days after cordoning off this restive city 30 miles west of Baghdad, Marines were beginning to view the quiet, residential neighborhood as relatively safe. Local farmers appeared receptive to their calls for cooperation and Marines had offered to pay compensation to a few whose property was damaged by their operations.

So when a squad of Marines emerged from behind its covered checkpoint Tuesday to begin a foot patrol, hostile fire was not what it expected.

Within seconds, everyone was diving for cover amid a barrage of bullets.

"There was fire all around my feet," said one of the Marines in the patrol.

Three Marines were wounded, including one hit by a bullet that pierced his helmet and lodged in his head and another shot in the leg.

Tanks, Humvees and helicopters quickly arrived to attack parts of the neighborhood, destroying one building. After treating the Marine's head injury, one serviceman grabbed his M-16 and joined the retaliatory strike.

Insurgents, meanwhile, were demonstrating a resolve of their own.

When Marines entered the neighborhood in tanks and helicopters, insurgents held their positions and fired back with rifles, mortars and small arms.

Residents reported that insurgent cells, which had been lying low in recent days, had a higher profile Tuesday, openly carrying weapons and positioning grenade launchers in the middle of the streets. One carload of Iraqis was captured while attempting to plant homemade bombs in the road.

"We will continue to resist them," said Abu Khamis Khulaifawi, who described himself as part of the insurgency in Fallouja. "We have enough mortars, enough rocket-propelled grenades and enough light arms."

Insurgents also appeared to have a strategy to defend the city.

They have blocked streets with buses and other vehicles in an attempt to divert military vehicles and have used an antiaircraft gun - later destroyed - to try to shoot down helicopters. One copter was hit by small-arms fire but not seriously damaged. The insurgents are using buses to transport fighters around the city and have darted in with cars to retrieve their dead after battles.

Falloujans set up a field hospital to stand in for the city's main facility, which is close to Marine positions.

Sawt al-Hurriyah [Freedom Voice] Society for Human Rights has addressed the following appeal:

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In view of the violent and tragic situation currently encountering the people of Al-Fallujah and due to the large number of wounded and casualties as a result of the indiscriminate aerial and land bombing and the acute shortage of medicine and medical supplies at the Al-Fallujah hospitals, we appeal to the Iraqi Health Ministry, the International Commission of the Red Cross, and the Iraqi Red Crescent to shoulder their responsibility toward this humanitarian tragedy to alleviate the people's suffering.

Not for the first time, the United States military has sworn to "pacify" Fallujah. But none of the options facing commanders in the defiant Sunni Triangle city appear to hold more promise than the gamut of tactics that have been attempted, without success, for nearly a year.

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The US military has promised to avenge the deaths of four US civilian contractors whose remains were mutilated in the city last week. Military officials say no options have been ruled out: airpower, overwhelming ground forces, house searches and mass arrests.

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The local power structure is the product of alliances between fiercely insular tribal clans, a growing Islamic movement and former Baath Party businessmen and intelligence officers, who have helped bankroll the insurgency and plot some of its more sophisticated attacks.

Only a handful of people are active insurgents, but because of widespread antagonism towards all westerners and the inability of the US-led coalition to crush the insurgency, the local population is always hedging its bets, careful not to alienate the forces that could soon be in charge again.

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In a peaceful country with a developed economy, two police officers per 1,000 people are enough to maintain calm, Clarke said. In Northern Ireland in the 1970s, the police needed 20 per 1,000. But in Iraq, 20 security personnel per 1,000 people would translate to 500,000 security forces - far more than the Iraqi personnel and coalition troops combined.

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But last month's fatal firefight between Marines and residents that killed up to 20 Iraqis, followed by the attack on US civilians, greatly complicates the prospects for such efforts.

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Dodge, the Iraq expert, agreed. "The first question is, can the US troops control this area of the [Sunni] Triangle? The second question is, can US troops control Iraq?" he said. "The answer to both questions is, painfully, 'No'."

More than 140 Iraqis and 30 American soldiers have died in three days of clashes.

The fight began when a Marine vehicle was hit by a rocket-propelled grenade fired from the mosque, wounding five Marines, and a large U.S. force converged on it, Byrne said.

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The military gave widely varying accounting of the casualties. Master Sgt. Robert Beyer, a spokesman for the 1st Marine Expeditionary Force in Camp Pendleton, Calif., said that one "enemy combatant" was killed, and there were "no worshippers" or civilian casualties. Byrne, in Iraq, said "we believe we killed a bunch of these guys."

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Because casualties were rushed to makeshift clinics in private homes and mosques, the number of dead and wounded was unclear.

During fighting elsewhere in Fallujah, U.S. forces seized another mosque, the al-Muadidi mosque, and a Marine climbed its minaret and fired down on gunmen, witnesses said. Insurgents hit the minaret with rocket-propelled grenades, causing it to partly collapse, the AP reporter said.

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Since Sunday, 34 Americans, two other coalition soldiers and more than 190 Iraqis had been killed in fighting across the country. The Iraqi figure did not include those killed at the mosque.