NAJAF, Iraq - Iraq's government warned Shi'ite cleric Moqtada al-Sadr on Thursday he would face a military strike within hours unless he ended an uprising, disarmed his militia and quit a shrine in the city of Najaf.

In Baghdad, U.S. troops overran the firebrand cleric's stronghold in the sprawling Shi'ite slum of Sadr City with tanks and armored vehicles, meeting little resistance.

Mays, a young Iraqi Shi'ite girl, cries after a mortar shell which landed outside her home in Najaf injured her uncle August 18, 2004. Explosions and sniper fire echoed from around holy sites in Najaf on Thursday, raising doubts that a radical Shi'ite cleric would end a bloody uprising and leave his sanctuary in a sacred shrine. REUTERS/Ali Jasim

A spokesman for Sadr said he wanted the government to send a negotiator to work out details for ending the two-week crisis in Najaf, which has dented the authority of interim Prime Minister Iyad Allawi, killed hundreds and rattled world oil markets.

"Sayyed Moqtada (al-Sadr) requests a negotiator to agree on arrangements to implement the demands," spokesman Sheikh Ahmed al-Sheibani told Reuters.

Iraqi Minister of State Kasim Daoud told a news conference in Najaf the government had exhausted all peaceful means to persuade Sadr to back down and was determined to impose a military solution unless he abandoned violence, handed in weapons and left the Imam Ali Mosque.

He said the scion of a respected Shi'ite clerical dynasty was facing his "final hours" before an attack.

Daoud vowed to liberate the shrine, but declined to say whether the government would storm the country's holiest Shi'ite site, where Sadr and his militia are holed up.

Any assault could provoke outrage among Iraq's majority Shi'ite community, especially if U.S. forces are involved.

Earlier in Najaf, explosions and sniper fire echoed around the southern city's holy sites.

Sadr said on Wednesday his militia forces would disarm and leave the mosque if a truce was agreed with 2,000 U.S. marines encircling the city, who have pounded his militia for two weeks with warplanes, helicopter gunships and tanks.

Sadr made his apparent concession after the government threatened to storm the shrine to teach the Mehdi militia "a lesson they will never forget."

WILL BE BACK DOWN?

He has since refused to budge, arousing skepticism among U.S. officials that he will back down.

"I don't think we can trust al-Sadr. I think we have to see action, not just words," National Security Adviser Condoleezza Rice told Fox News on hearing of the deal.

Most Najaf residents were skeptical fighting would end soon.

"What peace? I don't believe it. Look at this hell," said Talib Moussa, a 35-year-old laborer.

U.S. armored vehicles were deployed along the main roads in Baghdad's Sadr City, a slum of two million people where fierce fighting has broken out in the past two weeks.

The area has long been a no-go area for the U.S. military and foreigners in Iraq. Even former dictator Saddam Hussein, a Sunni Muslim, used to treat the suburb with caution.

"Sadr City residents, your government has banned all militias in Iraq. Come forward and surrender your weapons," said a message in Arabic read from loudspeakers mounted on Humvees.

U.S. forces said they had killed 50 militiamen on Wednesday in their push into Sadr City.

On Thursday Shi'ite gunmen appeared to have stopped fighting and melted away, witnesses said.

Sadr, who had earlier vowed to fight to the death in Najaf, has proved a wily strategist in past confrontations.

Despite the plump, bearded cleric's youth -- he is about 30 -- the latest rebellion has transformed him into the most recognizable face of resistance to the U.S. presence in Iraq.

One U.S. marine was killed in action in Najaf on Wednesday, the U.S. military said. More than 700 U.S. troops have died in action since the start of last year's U.S.-led invasion.

Al Jazeera television reported that Iraqi militants who said they captured a U.S. journalist last week had threatened to kill him within 48 hours unless U.S. forces left Najaf.

It showed footage of a man with a mustache kneeling in front of five masked men holding rifles. The channel identified the man as Micah Garen and the group as the Martyrs Brigades.

With reporting by Nadim Ladki in Baghdad

© Copyright 2004 Reuters Ltd

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