Mortar rounds and machinegun fire rattled the city, some 160km south of Baghdad, our correspondent said on Saturday.

It is still unclear whether there were any casualties. 

Residents said they saw a convoy of Humvees and trucks shot at on the outskirts of the holy city. 

For weeks occupation forces faced fierce resistance from fighters loyal to al-Sadr.

Al-Sadr's foeces took over the centre of Najaf, home to Shia Islam's holiest shrine, in April but relinquished control to Iraqi police as part of a ceasefire struck earlier this month.

However, some fighters are still hiding out in the city and have occasionally shot at US military convoys moving on the periphery of the town.