One village west of Fallujah was reportedly surrounded by Coalition forces looking for fighters in the past week, said Baptiste Martin, an aid worker at Premiere Urgence, a French NGO.

Another village, where the Iraqi Red Crescent was planning to set up a camp for displaced people, was allegedly under attack by Coalition forces, Martin said. He declined to give specific information about the sites to protect the civilians staying there.

"We're concerned about the problems (in these villages) because some people staying in Baghdad are trying to go back to them to be closer to their houses in Fallujah," Martin told IRIN in Baghdad.

The Fallujah violence, aired live on television screens with images of explosions and burning buildings, increased pressure on the United States to prevent a revival of the heavy bloodshed in Fallujah during the first two weeks of April.

"Violent military action by an occupying power against inhabitants of an occupied country will only make matters worse," Uited Nations Secretary-General Kofi Annan warned. "It's definitely time, time now for those who prefer restraint and dialogue to make their voices heard."

Mohsen Abdul-Hamid, a member of the US-appointed Governing Council also called on the United States to stop attacks in Fallujah and said if the United States refused, his Iraqi Islamic Party would consider withdrawing from the council.

A second unit of the Iraqi armed forces has mutinied at Fallujah after being involved in heavy fighting with insurgents Ali Allawi, the Iraqi Defence Minister, said yesterday.

Part of the 36th battalion of the paramilitary Iraqi Civil Defence Corps revolted last week after the unit had been fighting in the besieged city for 11 days, the minister told The Independent yesterday. Mr Allawi blamed the mutiny on "a failure of command. The commanding officer was absent, his deputy ... was seriously wounded and the number three faltered".

At the start of the siege of Fallujah three weeks ago, one of the five battalions of the newly formed Iraqi army refused to go to the city because many of its soldiers were not prepared to fight fellow Iraqis.

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The battalion may have split along ethnic lines. Its soldiers were recruited from the militiamen of the Iraqi political parties which belong to the US-appointed Iraqi Governing Council, and about half were Kurdish soldiers, known as peshmerga. The Kurds were prepared to fight but Iraqi Arab soldiers said they had had enough. Those who refused to fight were withdrawn from the battlefield for retraining.

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Mr Allawi, long exiled in London, won a reputation for efficiency while Iraqi minister of trade, a job he still holds. He is trying to raise an 80,000-strong Iraqi army, of whom 35,000 will be regulars and 40,000 to 45,000 will be in the paramilitary defence corps.

He says the poor performance of the Iraqi security forces stems from poor leadership and lack of training. Asked who will command the new Iraqi army, Mr Allawi said firmly: "I will give the orders." He added with a laugh: "I do not mean that in any Napoleonic sense."

Ambulances had tried and failed to evacuate Ali and other seriously wounded. They were turned back at US checkpoints by troops carrying out orders to the letter: no one in and no one out.

The doctor's face was gaunt, but there was one last hope: I had got past the checkpoints with my press ID and my passport and I could go the other way with Ali.

Suddenly reporting the battle and embedding with the Mujaheddin faded into insignificance.

It was a white-knuckle ride back to Baghdad with my guide, but 90 minutes later Ali was being treated at an Italian Coalition hospital in Baghdad by doctors who were shocked to see their first Fallujah evacuee. Surgery saved Ali's life, but not his lower left arm which was amputated. There was a hope that Ali would get prosthetic limbs, but only if the Italian Government would agree to pay the bills.

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The experience underlined the price of embedding.

Patrolling with the troops means sharing their hopes and fears; eating, sleeping and being bombed with the Mujaheddinmeans sharing more than a blanket, chicken and rice. It means listening out for reconnaissance helicopters, incoming ordnance, enduring the same sweaty moments, feeling helpless about injured families trapped behind "enemy" lines, and revulsion as maimed bodies are tipped into hospital beds.

Why don't more journalists embed on both sides?

The United States is in a no-win situation in Falluja. Yesterday, fighting increased in and around the city of 300,000, the place where four civilian contractors were burned to death last month. Even if American forces storm and subdue the town, it is unlikely that there will be peace there anytime soon.

It didn't have to be this way. Had the United States taken more time to understand the city - a place where even Saddam Hussein ventured cautiously - it might have been able to avoid the current showdown. Part of the misunderstanding can be seen in the way the Pentagon talks about the situation in Falluja, describing those holed up there as either die-hards of Saddam Hussein's regime or foreigners promoting the ideology of Al Qaeda. What the Pentagon is neglecting is a third group, one that could prove more deadly to the occupation: the tribes of central Iraq. They are a tough lot with a long history of resistance to any outside authority.

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The only possible strategy for the United States would be to step back from Falluja and negotiate individually with tribal leaders, transferring to them the responsibility for security in the city, including the eviction of the foreign fighters. It's doubtful, though, that the Bush administration would be willing to even consider this approach.

"You have to lose an empire to understand how to do peacekeeping," said British defence analyst Paul Beaver. "I think there's despair at the way the Americans go about peacekeeping. The Americans are not good at it."

So far, disquiet among serving British commanders has mostly been in the form of oblique hints that they would prefer to see American troops act with more restraint.

The chief of the general staff, Sir Mike Jackson, said last week it was a "fact of life" that "the British approach to post-conflict (situations) is doctrinally different to the US"

"We must be able to fight with the Americans but that does not mean we must fight as the Americans," he said.

But the hints are becoming more obvious.

Worries among the diplomatic corps burst into the open this week when 52 former senior British diplomats sent a letter to a news agency saying Blair should either persuade Bush to change course or abandon a policy "doomed to failure".

"Heavy weapons unsuited to the task in hand, inflammatory language, the current confrontations in Najaf and Fallujah, all these have built up rather than isolated the opposition," they wrote.

The Marines postponed by yet another day, at least until Friday, the launch of joint American-Iraqi security patrols intended to demonstrate that Iraqis and Americans are uniting to restore law and order in the unruly city.

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Commanders in Fallujah said intelligence found no signs that the attacks in this Sunni Muslim city once loyal to Hussein were tied to the birthday of the fallen dictator, who's in U.S. custody awaiting a war crimes trial.

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By day, commanders at Camp Fallujah dispatched helicopter gunships and warplanes to drop laser-guided bombs as the fighters moved closer to the Marine units. At least one 500-pound bomb was used, destroying a building thought to have been used by the resistance to attack. By night, AC-130 gunships fired artillery at guerrilla targets.

Military officials estimate there are between several hundred and a few thousand armed insurgents in Fallujah. Speaking to reporters Wednesday at the Pentagon, Marine Maj. Gen. John F. Sattler, head of operations for U.S. Central Command, put the number at about 1,500.

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People in Baghdad and other cities, however, maintain that the fighters in Fallujah are ordinary Iraqis who have taken up arms against the occupation; the sustained fighting and the Marine cordon around the city have prevented foreign journalists from independently assessing the nature of the guerrilla forces.

As they fight the Marines, some guerrillas have used techniques that suggest they have military experience, the officials said. In addition, based on the munitions and contraband uncovered by Marines during their initial foray into the city, U.S. military officials believe a large number of roadside bombs and car bombs detonated elsewhere in Iraq may have been manufactured in Fallujah.

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But a resumption of offensive operations is widely opposed by Iraqis. "The only way to solve this is through a peaceful solution," said Hachem Hassani, a Sunni political leader who has participated in negotiations between city leaders and military commanders. "Attacking the city will only make matters worse."

The local leaders who participated in the discussions have described Fallujah as having been hijacked by foreign Islamic militants, people involved in the talks said. In a bid to end the standoff, the local leaders have urged U.S. officials to grant foreigners safe passage out of the city, but that request was rejected.

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Some Iraqi leaders have advocated bringing in security forces from other parts of the country or assembling a new force composed of former Iraqi army soldiers who are Sunnis. U.S. officials said both those concepts also have deep flaws. Allowing Shiites from the south or ethnic Kurds from the north to fight in Fallujah could spark ethnic and religious tensions elsewhere in Iraq; participation of Kurds in a special civil defense battalion that assisted Marines in the city earlier in the month fueled a wave of threats against Kurds living in Baghdad. Assembling a new force of military veterans also is regarded by American officials as a dicey proposition.

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Brahimi has urged the Bush administration to find peaceful solutions in both cities. One U.S. official said Brahimi's lobbying played a role in the White House decision over the weekend to postpone a resumption of large-scale Marine raids in Fallujah.

U.N. Secretary General Kofi Annan also has urged U.S. officials to do everything possible to reach a peaceful resolution to the standoffs. Annan told reporters Wednesday that he subscribed to the view in Iraq that "violent military action by an occupying power against the inhabitants of an occupied country will only make matters worse."

U.S. marines decided Thursday to end their bloody, nearly four-week-old siege of Fallujah, saying American forces will pull back and allow an all-Iraqi force commanded by former general under Saddam Hussein to take over security.

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U.S. marines encircled Fallujah on April 5 and have fought an estimated 1,500 guerrillas in repeated battles as ceasefires unravelled.

Heavy U.S. bombardment of the city for the last two nights, televised around the world, heightened international pressure to negotiate a truce and spare civilian casualties in the city of 300,000.

The arrangement was negotiated between U.S. forces and Fallujah representatives, including four Iraqi generals.

The deal provides for a new force, known as the Fallujah Protective Army, to enter the city and provide security. It will consist of up to 1,100 Iraqi soldiers led by a former general under Saddam, said U.S. military spokesman Lt.-Col. Brennan Byrne.

"The plan is that the whole of Fallujah will be under the control of the FPA," Byrne said.

He identified the commander of the FPA only as Gen. Salah, a division commander under Saddam. Many of the guerrillas in Fallujah are thought to be former members of Saddam's regime or military.

Last week, Iraq's top U.S. administrator, Paul Bremer, announced that the new Iraqi army would start recruiting top former Saddam-era officers who were not involved in the regime's crimes.

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Three days of intense fighting around Fallujah had brought sharp international condemnation of the U.S. action.

"Violent military action by an occupying power against inhabitants of an occupied country will only make matters worse," UN Secretary General Kofi Annan warned.

"It's definitely time, time now for those who prefer restraint and dialogue to make their voices heard," Annan said.

Mohsen Abdul-Hamid, a member of the U.S.-appointed Governing Council, also called on the United States to end the fighting in Fallujah and said if the United States refused, his Iraqi Islamic party would consider withdrawing from the council.

"We call on the American troops that are bombing Fallujah to stop immediately and withdraw outside of the city," Abdul-Hamid told al-Jazeera television. "Otherwise, we'll be forced . . . to consider the subject of withdrawal."

United Nations Secretary-General Kofi Annan appealed to Bush to show restraint, saying bloodshed could turn Iraqis against the occupying forces just as the U.N. is working with Washington to restore an Iraqi government on June 30.

"The more the occupation is seen as taking steps that harm the civilians and the population, the greater the ranks of the resistance grows," Annan told a news conference in New York.

There was no immediate resumption of the shellfire and air strikes that have shaken Falluja, 50 km (30 miles) west of Baghdad, this week in the most devastating display of U.S. firepower since the siege by U.S. Marines began in early April.

Local police chief Sabar al-Janabi told Reuters he was taking part in new talks with the Marines involving former Iraqi army officers and other leading citizens in the hope of reaching a deal to let U.S. troops join Iraqi police on patrol in town.

A Los Angeles Times reporter, quoted by CNN, said four former Iraqi army generals had agreed to try to bring control to Falluja, allowing U.S. Marines to withdraw. But the agreement is tentative and it is not clear if the Iraqi generals will be able to persuade insurgents to disarm.

Now, from Fallouja to the White House to the Pentagon and across the Capitol, officials are taking a deep breath.

From one end of the chain of command to the other, there is a palpable sense of how high the stakes may be in the looming battle between U.S. forces and insurgents holed up in the city of 300,000 in the Sunni Triangle:

� The virtual certainty of civilian casualties and their potential for spurring wider resistance to the U.S.-led occupation.

� The problem of ordinary Iraqis' increasingly negative attitude toward the U.S. presence.

� The American public's perception of how the war is going.

� The reaction of the international community as the June 30 deadline approaches for the transfer of power to a transitional Iraqi government.

� Whether U.S. casualty rates continue to climb or begin to decline.

Yet high as the risks may be, U.S. officials - and many outside analysts - say a full-scale assault is all but inevitable.

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Since April 5, days after four American civilian contractors were killed and their bodies mutilated in Fallouja, Marines have encircled the city. And despite an 18-day cease-fire, skirmishes have erupted daily, with Marines calling in airstrikes Wednesday for the second consecutive day.

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One senior official described the delay as part of "a whole developing public diplomacy, information operations campaign" designed to reduce negative reactions to a final assault.

Accordingly, U.S. officials have sought to focus attention on the insurgents' violations of the cease-fire. And they have described the response by American forces as purely defensive and retaliatory.

But the tanks, AC-130 gunships and attack helicopters used in these "counterattacks" have delivered such heavy firepower that some analysts believe they have a larger purpose: to soften up and hollow out the insurgent forces before a final assault.

Moreover, military sources said, Special Forces units and other special operations teams have carried out lower-profile offensive operations within the Fallouja perimeter, including raids on suspected guerrilla leaders' hide-outs.

Many military strategists believe that such attacks should be followed by a full-scale assault, the blueprints for which have been approved by the Pentagon.