"About 40 tanks and military vehicles advanced on the city centre by three roads," into the area around the shrine of Imam Husain, a local resident said on Saturday night.

The occupation soldiers then ordered residents in Arabic over loudspeakers not to go on their porches, not to approach windows and not to open their doors.

Their advance to the city centre came hours after a top US general denied claims by an Iraqi resistance leader that a pull-back from the locality was being finalised.

Karbala - holy to Shias around the world - has witnessed heavy fighting between occupation forces and Shia leader Muqtada al-Sadr's Mahdi Army over the past few weeks.

Strong denial

Brigadier General Mark Kimmitt said he had heard the reports, but was "not aware of any withdrawal going on in Karbala".

"We've repositioned some forces inside of Karbala but it's quite a stretch to consider that to be anything remotely resembling a withdrawal"

Brigadier General Mark Kimmitt



"We've repositioned some forces inside of Karbala but it's quite a stretch to consider that to be anything remotely resembling a withdrawal," he said.

Kimmit was responding to Ali al-Kazali, a senior member of the Mahdi Army, who said resistance fighters had laid down their arms in the city centre.

"We have decided to remove all the Mahdi Army presence from the centre of the city as we are waiting for the agreement with the other side to be finalised this afternoon," Kazali said.

On Friday, US troops pulled back from the centre of Karbala after days of heavy fighting with resistance fighters.

Earlier in the week Iraq's most revered Shia cleric, Ayat Allah Ali al-Sistani, called on both US forces and the Mahdi Army to withdraw from the holy cities.

Al-Sadr has repeatedly expressed his opposition to the "foreign invaders" and has called on them to leave Iraq.

Clinton speech

Former US President Bill Clinton has meanwhile said the United Nations is better suited than the US to lead Iraq towards democracy.

The former US president is critical
of the Bush administration

"We would be better off in the long run if Iraq can succeed as a democracy but it will be challenging," Clinton said in a speech in Brazil.

"There are so many people who suspect our motives," the former president bemoaned. "I don't think Iraq was about oil and imperialism but it was about unilateralism over cooperation as a way to shape the world in the 21st century."

He insisted democracy in Iraq was attainable, but the effort should be multilateral, with the United Nations taking a leading role.