by Jay Deshmukh
NAJAF, Iraq, Aug 18 (AFP) - US troops, backed by helicopter gunships, pounded militia bastions in Najaf`s historic Old City on Wednesday before Iraq`s defence minister offered rebels a last chance to surrender or be crushed in battle.
"The coming hours will be decisive and we will teach them a lesson they will never forget," Defence Minister Hazem al-Shaalan told reporters on a visit to Najaf, flanked by provincial governor Adnan al-Zorfi.
"In the coming hours they must surrender," Shaalan said, after telling Al-Arabiya television, "The Iraqi forces will be the ones in charge of the operation."
Earlier US helicopters had fired rockets close to Najaf`s vast cemetery, while snipers planted on rooftops fired at targets around the city`s holy Imam Ali shrine, the headquarters of the militia loyal to radical Shiite cleric Moqtada Sadr.
US troops supported by Iraqi security forces have effectively sealed off the heart of the holy city, trapping Sadr`s Mehdi Army inside.
US tanks were parked just 600 metres (yards) on the south side of the Imam Ali mausoleum -- one of Shiite Islam`s most sacred sites -- as troops pushed forward, clashed with Mehdi Army fighters, retreated and pushed forward again.
Later a lull descended on the city, where houses were reduced to rubble, while spent mortar and rocket shells littered the deserted, war-torn streets.
"The Iraqi government will not sit idly by in the face of this insurgency, but is serious about restoring security and stability in the holy city as soon as possible," said a statement issued by Prime Minister Iyad Allawi.
"Only Iraqis will enter the mausoleum. There will not be an American intervention" inside the shrine, Shaalan said, after his US counterpart Donald Rumsfeld said US troops were "unlikely" to storm the holy places, which could incite a Shiite backlash across the region.
"The American intervention will only be through cover from the air and some ways leading to the mausoleum, but the entrance into the mausoleum will be 100 percent Iraqi," Shaalan said.
"We have trained our sons from the National Guards to lead the assault, and God willing, it will be completed in a few hours," he added.
Critics in the US Congress have cast doubt on the ability of Iraq`s security forces to do the job alone.
The fierce fighting buried a peace initiative spearheaded by emissaries from Iraq`s key national conference, who braved danger late Tuesday to travel to the shrine, only to be snubbed by Sadr, who said "aggression by the Americans" had made it unsafe for him to appear.
Rajaa Habib al-Khuzai, a former member of Iraq`s superseded Governing Council, who went to Najaf said the head of the mission, Sheikh Hussein al-Sadr, would meet Allawi to ask for a ceasefire for a subsequent trip.
"If we can get the ceasefire, we are optimistic," she said. "We were received very well by Sadr`s aides, but they told us it was impossible to take us to meet him in case we were followed."
But others were less optimistic.
"If it was dangerous for him for security reasons it was also dangerous for the team who went. I am really disappointed," said Abdel Halim al-Rohani, a spokesman for the conference`s preparatory committee.
Iraq`s national conference -- heavily overshadowed by the Najaf conflict -- was scheduled to wind down Wednesday after voting for a new interim legislature.
The vote was postponed by one day amid a whirl of controversy from hundreds of furious delegates lashing out at the country`s big political parties for trying to hijack the process, and threatening to walk out in protest.
Nineteen of the 100 seats on the body have already been handed to members of the defunct Governing Council, which was established by the US-led occupation after the fall of Saddam Hussein in 2003 and included many returning exiles.
According to conference rules, delegates of different leanings -- religious and secular, Kurdish and Arab -- are to draw up lists for the remaining 81 seats and submit them to an open vote.
Elsewhere, at least four Iraqis were killed and another four wounded when their minibus was caught in a shoot-out between US forces and insurgents near the southern city of Kut, police and the military said.
Iraqi police said five women students were killed and another five wounded, while the military put the death toll at four.
A US marine was killed in the troubled western province of Al-Anbar, bringing to 704 the number of US soldiers killed in action in Iraq since the 2003 US-led invasion to topple Saddam Hussein.
In the northern city of Mosul five people were killed and 20 wounded when a mortar bomb fell on a central market, police and medical sources said.