Backed up with helicopter gunships, a spokesman in Baghdad claimed occupation forces had killed 43 Shia militiamen by Tuesday morning.
But hospital sources said of the 28 people seriously wounded in the clashes, only six of them appeared to be militiamen.
Residents said US war planes fired at a Mahdi Army militia post 10km northeast of Najaf, after fighting between occupation forces and militiamen broke out in the area.
Aljazeera's correspondent in Najaf, Uday al-Katib said he heard loud explosions when US troops advanced near the Bu Hidrawi around the road to Kufa.
Reporting from al-Furat al-Awsat hospital, al-Katib added a few of the casualties could be treated due to a severe shortage of medical staff and supplies.
"We're going to drive this guy [Muqtada al-Sadr] into the dirt"
US Brigadier General
1st Armoured Division
One medic said US occupation troops had taken over al-Sadr hospital and were refusing to hand over much needed supplies.
US occupation forces have been set since Monday to enter parts of Najaf to kill or capture Iraq's most outspoken anti-occupation Shia cleric, Muqtada al-Sadr.
Confrontations have already erupted between the US military and members of al-Sadr's Mahdi army on the outskirts of Kufa.
Shia leaders have warned there will be an explosion of anger among the 15 to 16 million Iraqi Shia if US soldiers enter Najaf.
But Brigadier General Mark Hertling, the deputy commander of the 1st Armoured Division, told journalists on Monday: "We're going to drive this guy [al-Sadr] into the dirt.
"Either he tells his militia to put down their arms, form a political party and fight with ideas not guns, or he's going to find a lot of them killed."
Grand Ayat Allah Ali al-Sistani, Iraq's most revered Shia religious leader, has said if US troops enter Najaf or Karbala, they will cross "a red line" - implying general Shia resistance.