American soldiers responsible for the death of the Shia protester will be punished, said Christopher Hoffman of the Second Armoured Cavalry regiment in a letter on Thursday.
"What happened was a mistake and was not directed against the people of Sadr City," he wrote.
US forces had opened fire on thousands of Shia after demonstrators gathered around a telecommunications tower to protest, when American forces tried to tear down a banner advocating Islamic teachings.
One demonstrator was killed and at least four others were injured.
The incident took place overnight in Baghdad’s mainly Shia suburb of Sadr City, where occupation sources say they were fired at by rocket-propelled grenades (RPGs).
A US military official said the banner was blown down by a Black Hawk’s rotor.
Amateur video footage, obtained by Associated Press television, showed a Black Hawk helicopter hovering about a metre from the top of the tower, trying to tear down the banner.
Shia also protested in Ba'aquba
for the release of a US-held cleric
“We’re peaceful people but one religious decree (issued from imams) and the entire American army will become our prisoner,” said Hassan Azab, a member of the local district council.
Hoffman also promised to reduce the number of patrols in Sadr City and to meet with clerics to discuss what he called "reimbursement".
But Sheikh Qais al-Kazali, a deputy sectretary to anti-occupation cleric Moqtada Sadr, said the offer was being rejected and warned occupation troops not to return to the suburb.
"If the Americans promise not to come back to Sadr City nothing will happen. If they do, the situation will be worse," he said.
"I heard that there are people here who are preparing mines and...explosive belts and others are ready to use RPGs. We have difficulties controlling the people," added al-Kazali.
It was one of the first incidents when Shia rise up against their occupiers. In the run-up to the war, Washington believed the group would fully support their invasion in exchange for granting Shia political power in the country.
Under ousted Iraqi President Saddam Hussein Shia, who make up the majority of the country, were politically marginalised. Discontent is rising among them as the occupation drags on.
The protest coincides with a written statement from Hussein, urging Shia to resist the US-British occupation.
In related developments, RPGs were fired at an American tank in the town of Abu Sayda, about 120 km north of Baghdad, killing the tank's crew members, eyewitnesses told Aljazeera.
UN nod of approval
Veto powers all signed on to the
Meanwhile, Iraq's Governing Council called on the UN Security Council to recognise it as Iraq's official representative when the 15 nations meets to vote on a US resolution on the status of the body.
The Security Council is set to vote on Thursday on a resolution that would acknowledge, but not formally recognise, Iraq's interim government.
The original US draft put to the other four permament members, including China, France, Britain, and Russia, for consultation had proposed that UN members "endorse" the Governing Council of Iraq.
The US appointed a 25 member Council for Iraq as part of moves to eventually hand over the reins of power to Iraqis to rule their own country. But the occupying administration in Baghdad wields veto powers over the Council’s decisions.
But some diplomats at UN headquarters said this would give too much legitimacy to the Baghdad administration.
Instead, the text reads “welcomes the establishment of the broadly representative Governing Council on Iraq”.
Syria, the 15-nation council’s only Arab member, asked for more time to debate the text put forward by Washington on Wednesday. But US Ambassador John Negroponte said he would push for the vote on Thursday.
Syria’s UN Ambassador, Mikhail Wehbe, the Council’s president for August, insisted on consultations, saying “it’s not a matter of take it or leave it”.