Flames rose from an area around a US military base outside Falluja after a large explosion was heard on Sunday evening, witnesses in the besieged city said.
A witness said he could see flames rising from the direction of a US marine camp just east of the city after the blast.
Iraqi fighters were said to have opened mortar fire at Camp Falluja.
At the eastern gate, US forces backed by tanks and armed fighters are engaged in heavy clashes. There was no immediate word on casualties.
More than 1000 US soldiers and Iraqi forces have surrounded the city.
Strikes demolish homes
US jets pounded several sites in al-Sinaai, al-Juhaivi and al-Askari neighbourhoods on Sunday.
Tanks positioned at the north-eastern gate of the city were bombing houses in al-Juhaivi area, an Iraqi journalist told Aljazeera, adding that ambulances were unable to reach the targeted areas.
Falluja hospital officials also said US artillery shells fell on a house in Halabsa village, 16km south-west of the city, on Saturday, killing a three-year-old girl and injuring four family members.
Falluja residents say the shelling is
indiscriminately killing civilians
Several homes have been demolished in the city, a Falluja resident in the city, Muhammad Abd al-Aziz told Aljazeera.
"US helicopters and armoured vehicles are bombing the city in an attempt to destroy its infrastructure, with no consideration as to whether its targets are resistance fighters or citizens," Abd al-Aziz said.
Iraq's US-backed interim government has warned that it will launch a major offensive in Falluja if the city does not hand over al-Qaida-linked Abu Musab al-Zarqawi and his followers.
Falluja representatives say they have seen no evidence that al-Zarqawi is holed up there.
Talks to find a solution to the stand-off between Falluja citizens and the interim government have been suspended.
"Falluja citizens want to live peacefully," said Abd al-Aziz. "However, it seems the Bush administration has ordered those fulfilling its policies in Iraq to escalate the situation and lay down unacceptable and inapplicable conditions."
Outside the city, a US military convoy was targeted in a rocket attack on the road to Ramadi.
US military convoys and transports
are routinely attacked
Armed fighters attacked the convoy at 9am (0600 GMT), setting ablaze a military vehicle, said a police officer who patrols the road.
The US military had no immediate confirmation of the attack in the western al-Anbar province, the eye of the storm in the struggle between US forces and Iraqi insurgents.
In the town of Rutba near the Jordanian border, insurgents dynamited the building housing the local council, police said. There was no immediate word on casualties.
In the north-western city of Hiyt, police chief Sabir Nimrawi was kicked out by tribesmen and the local council after a firefight on Monday ended with US marines calling in aircraft that shelled a mosque.