US tank and helicopter fire pounded the area around the shrine in Najaf on Thursday.
Continuing through the morning, after a battery of overnight attacks, US armoured vehicles took up position in Rassul street, which leads to the southern entrance of the Imam Ali mausoleum.
US snipers were hunkered down on the rooftops of neighbouring houses.
A dozen bullet holes were visible in the golden dome of the shrine and some of its golden tiles had come loose, said an AFP correspondent, one of three reporters inside the shrine.
Several missiles were fired from the air and tanks were still within 20 metres of the western side of the mosque, Shia leader al-Sadr's headquarters since his spring uprising against US-led occupation troops.
US troops have covered all
entrances to Imam Ali shrine
All entrances to the mosque were covered by elite US marksmen and it was impossible to enter or leave the building, as the heavy thud of al-Sadr's al-Mahdi Army mortar fire resounded from inside the shrine.
Mosque loudspeakers urged the fighters to jihad as sanitary conditions deteriorated in the mosque, effectively cut off by US troops since early Wednesday.
Meanwhile, al-Sistani's convoy, swollen by thousands of faithful and accompanied by dozens of police and national guard patrol vehicles, was moving at no more than 20 km an hour on the 400 km journey north from Basra.
Two British occupation military helicopters hovered above al-Sistani's motorcade as it crawled along.
Speaking to Aljazeera, al-Sistani spokesman Hamid al-Khafaf said the cleric had called on those heading for Najaf to wait at the gates and not enter the city until the spiritual leader arrived.
Al-Sistani's convoy is moving
at a slow pace
They should wait for further instructions from al-Sistani's office, al-Khafaf said, adding that it was necessary to abide by the cleric's guidance.
Packed into hundreds of cars, pick-up trucks and buses, Shia faithful of all ages, including Shia leader Muqtada al-Sadr supporters, waved green banners and pictures of al-Sistani, straddling all four lanes of the road.
At Tell al-Lahm, 100 km north of Basra, 4,000 residents, including tribal leaders, lined both sides of the road to welcome the convoy, which stopped for around 10 minutes.
After talks with government ministers in Basra late on Wednesday, an al-Sistani aide said the Ayat Allah wanted occupation troops to leave Najaf, Iraqi police to take responsibility for security and the government to pay compensation to those who have suffered in the fighting.
Al-Sistani arrived in Iraq via the Kuwaiti border on Wednesday after a three-week spell in London, where he travelled for medical treatment for a heart problem just as the Najaf fighting erupted.