A U.S. Army Abrams tank burns after an attack in Baghdad this morning.
A delegation from Iraq's Governing Council has held talks in Falluja today to try and secure a peace deal with rebels following a US military offer of a ceasefire nearly a week into fighting that has killed hundreds of people.
"The delegation, which is made up of two members of the Governing Council and also includes clerics and other notables from Baghdad, is meeting (rebels) in Falluja now," Mahmoud Othman, a member of the Governing Council, told Reuters.
The US truce offer came after Iraqi politicians demanded a halt to the worst fighting since Saddam Hussein's fall.
A statement by the US-installed Governing Council criticised "military solutions and the policy of collective punishment that has fallen on innocent civilians". It demanded "an immediate ceasefire and the reliance on political solutions in all areas of the country, especially Falluja".
The violence has put severe pressure on the council and on the interim Iraqi government, several of whose members resigned or threatened to do so unless the bloodshed stops.
Earlier, US Brigadier General Mark Kimmitt told a news conference this morning that: "Coalition forces are prepared to implement a ceasefire with enemy elements in Falluja commencing at noon (9 a.m. Irish time) today."
"At this point it's an aspiration. We are hoping to use this press conference...to get this message to the enemy," he said.
In Baghdad, street fighting continued as youths with rifles and grenade launchers battled US troops in a Sunni Muslim area, witnesses say.
Dozens of gunmen, their faces masked with Arab headdresses, shot at US troops from alleyways in the staunchly Sunni district of Adhimiya in northwestern Baghdad.
Witnesses said fresh clashes had also erupted in Falluja despite the unilateral ceasefire declared by the Americans on Friday.
In other attacks, a television report showed a blazing truck that witnesses said had been hit by a roadside bomb aimed at a US convoy on the airport road. A Reuters photographer saw a burning tank on a highway leading west from Baghdad.
More than a million Shias Muslims were set to mark the holy day of Arbain in the shrine city of Kerbala on Saturday, prompting fears among US officials of more chaos and bloodshed.
Arbain, beginning on Saturday night and continuing through Sunday, comes 40 days after the religious period of Ashura, when suicide bombers in Baghdad and Kerbala killed 171 people.
The director of Falluja's main hospital said on Friday about 450 people had been killed and 1,000 wounded since the Marines launched "Operation Vigilant Resolve" five days earlier.
US Marines were ordered to suspend offensive operations in Falluja at midday on Friday, but this did not halt fighting.