"They are negotiating about the situation at al-Mukhaiyam mosque," a police source in the city, 110 km south of Baghdad, said.

Al-Sadr's Mahdi army militia clashed on Tuesday with followers of senior Iraqi cleric Ayat Allah Ali al-Sistani after his group attempted to seize two of the most revered shrines for the Shias, the mausoleums of the seventh-century leaders Abbas and Husayn.

At least one person was killed and 24 others wounded in the clashes.
 
About 15 of al-Sadr's followers then retreated to the city's al-Mukhaiyam mosque, where they were surrounded by Iraqi police, civilians and a US-backed protection force for the site.

Occupation forces said eight people had been taken hostage inside the mosque.
 
The top US military commander General Ricardo Sanchez visited Karbala late on Tuesday and met police chief General Abbas Fadl Abud. Abud recommended that the coalition should let the Iraqis negotiate a peaceful end to the confrontation at the al-Mukhaiyam mosque.

Anti-occupation

In his last Friday sermon in the southern town of Kufa, al-Sadr announced the formation of a rival cabinet to that installed by the US-appointed Governing Council.

“I have decided and I have formed a government made up of several ministries, including ministries of justice, finance, information, interior, foreign affairs, (religious) endowments and the promotion of virtue and prevention of vice,” he said.

Al-Sadr was ignored by the US occupying administration in the formation of the Governing Council.