"The uprising will continue and we will not negotiate unless they fulfil our demands, which are a withdrawal from populated areas and the release of prisoners," al-Sadr aide Qays al-Ghazali said on Tuesday.
He also read a statement from the Shia cleric denouncing President George Bush and the US-led occupation.
"This insurrection shows that the Iraqi people are not satisfied with the occupation and they will not accept oppression," the statement said.
Al-Sadr said he called on countries with forces in Iraq to withdraw their soldiers.
"I direct my words to the great evil, Bush, and I ask who is against democracy? Is it the one who is advocating peaceful resistance or the one who is bombing the nation and shedding blood?" he said.
The statement said al-Sadr had decided to end a sit-in at the main mosque in Kufa, near Najaf, because he feared that the mosque would be raided and defiled by occupation troops.
So far 66
Iraqis and seven US soldiers have been killed in fighting between followers of al-Sadr and occupation forces across the country.
Muqtada al-Sadr has asked
occupation troops to withdraw
Of this, 39 Iraqis died and 126 were wounded in al-Sadr City, a Baghdad suburb, in the past two days, a spokesman for al-Thawra hospital said on Tuesday.
Fierce clashes re-erupted in this stronghold of al-Sadr followers after US helicopters and tanks bombed the densely populated neighbourhood, according to Aljazeera's correspondent Aktham Sulayman.
US forces occupied all police stations in al-Sadr City. Tanks and armoured Humvees stood guard in front of the stations across the impoverished district which is home to more than two million people. Heavily armed soldiers were posted on the rooftops.
On Monday, US helicopters attacked an al-Sadr office in Baghdad, leaving five Iraqis dead.
"I direct my words to the great evil, Bush, and I ask who is against democracy? Is it the one who is advocating peaceful resistance or the one who is bombing the nation and shedding blood?"
Fighting between occupation soldiers and members of al-Sadr's militia, al-Mahdi Army, erupted on Sunday when Spanish forces killed at least 20 demonstrators in the city of Najaf who were demanding the release of al-Sadr aide, Mustafa Yaqubi.
Three US soldiers were killed in separate incidents on Monday and Tuesday around Baghdad and four US marines died in al-Anbar province west of the capital, said the military on Tuesday.
The soldiers died in the mainly Shia district of al-Kadhimiya.
In the southern town of Nasiriya, 15 Iraqi civilians and occupation troops, including one Ukranian soldier were killed in clashes.
Al-Mahdi Army has no support
from other Shia factions
Twelve Italian troops were injured, though none seriously.
Militiamen were still controlling the streets in the area, near the local headquarters of the occupation authorities.
Also in the southern town of Amara, 12 Iraqis have died during clashes with British occupation soldiers, according to medical sources there.
In Karbala, also in the south, al-Sadr's supporters seized control over a district, including a police station, reported Aljazeera's correspondent.
Al-Sadr has turned down an appeal by Iraq's Shia establishment to renounce fighting.
Al-Sistani is said to be supporting
appeal for fighting to be renounced
An aide to Muhammad Bahr al-Ulum, a member of the US-appointed Iraqi Governing Council, said Iraq's leading Shia cleric Ayat Allah Ali al-Sistani, supported the appeal.
Al-Sistani, an Iranian-born cleric, has ordered Iraq's Shia not to take up arms against the occupation. He has not spoken directly on the violence involving al-Sadr's supporters, but he is expected to make a statement in the next few days.
"The Hawza is unanimous on this," said the aide, referring to the main centre of Shia instruction in the southern city of Najaf.
Al-Sadr has refused to meet a tribal delegation and representatives of Bahr al-Ulum at the main mosque of Kufa, near the holy city of Najaf.
US occupation authorities said on Monday an arrest warrant had been issued for al-Sadr in connection with the murder of a fellow Shia cleric a year ago.
Occupation troops in tanks have
bombed Iraqi neighbourhoods
Al-Sadr has denied involvement in the death of Sayyid Abd al-Majid al-Khoei, seen as a pro-Western cleric.
Hamid al-Bayati, spokesman for the Shia Supreme Council for the Islamic Revolution in Iraq (SCIRI), criticised the announcement of the arrest warrant against al-Sadr.
"The incident took place a year ago and I don't think any Iraqi would believe that this arrest warrant is at the right time," he told CNN. "It is very bad timing, even if the basis is right. I don't know why they decided to act now.
Following Sunday's Najaf killings, al-Sadr's office issued a statement calling on supporters to end protests and instead take up arms against occupation forces.
However, al-Sadr is relatively junior in the Shia hierarchy.
He is the son of Grand Ayat Allah Muhammad Sadiq al-Sadr, a prominent Iraqi Shia leader who was killed in 1999 along with two of his other sons.