The US marines announced they were preparing for a "decisive" assault on Falluja and the city of Ramadi even as the country's interim prime minister, Iyad Allawi, issued another ultimatum to the town's residents.
In Ramadi, west of Baghdad, fierce clashes erupted between Iraqi fighters and US troops at the eastern entrance of the city. Medical sources in Ramadi hospital said two women were injured in the clashes.
Earlier, three mortar rounds fell on the US military camp in the area and heavy smoke was seen overhead.
In Baquba, the deputy governor of Dially governorate, Uqail al-Adly, was killed in an attack by unknown men when he parked his car in front of a commercial office in al-Yarmuk neighbourhood in the centre of the city.
Al-Adly was a member of the Supreme Council for Islamic Revolution in Iraq.
"We are gearing up for a major operation," Brigadier General Denis Hajlik told reporters at a base near Falluja. "If we do so, it will be decisive and we will whack them."
Hajlik, deputy commander of the 1st Marine Expeditionary Force, said the expected operation against Falluja and Ramadi would also involve Iraqi forces.
The US military has been pounding targets there for the past several weeks leading to extensive casualties among residents and damage to the town's infrastructure.
Against this backdrop of rising tension, the interim Iraqi government said it would dispatch a team headed by the deputy chairman of the Iraqi interim National Council to meet Falluja leaders, according to delegation sources.
Destruction in Falluja testifies to
weeks of relentless US bombing
Iyad Allawi "has agreed to a proposal by certain members of the National Council [Iraq's interim parliament] to find a peaceful solution" to the stand-off in Falluja, council member Ahmad al-Barrak said on Friday.
"Allawi said he did not have any objections but that this would be the last attempt" at mediation before a possible military assault against the town, al-Barrak said.
Talks between the US-backed interim government and delegates from Falluja collapsed in mid-October after Allawi ordered the town to surrender Jordanian Abu Musab al-Zarqawi, and others in his al-Qaida-linked group, or face invasion.
A Falluja negotiator said the mujahidin shura (council) - a
body that says it represents at least some of the resistance forces in the city - along with local governors and tribal
shaikhs had agreed in principle to restart talks provided the
US military halts daily air strikes.
Lieutenant Colonel Hakim Karim Midab said local leaders would demand residents who had fled the fighting be allowed to return and be compensated for damage, and that US troops remove a checkpoint on the town's eastern entrance.
US insist on attacking Falluja,
says analyst Dr Makki
Midab said the city's leaders would also push for an Iraqi National Guard force that would include local residents to keep the peace between US forces and fighters in the town.
But the interim Iraqi government has refused all negotiating points and insisted on the surrender of al-Zarqawi, whom the US has blamed for a string of deadly attacks and beheading of captives in Iraq.
Falluja residents, however, insist that al-Zarqawi is not in their town.
Meanwhile, Iraqi political analyst Dr Liqa Makki told Aljazeera that US forces were bent on attacking Falluja.
The US troops in Iraq would soon launch a fullscale offensive against Falluja to avenge the defeat of its marines in the town last April, he said.
The US would expel any media outlet in Falluja, as the presence of Aljazeera last time proved embarrassing to the US troops, Dr Makki said. In the absence of Aljazeera and other media it would make it easier for the attacking troops to use maximum force regardless of collateral damage and civilian casualties, he said.
The lack of media observers will
give US free hand, says Dr Makki
The analyst said the interim government might be inclined to seek a peaceful resolution to the stalemate in Falluja, which is still not under US control.
The ultimate decision would not be in the hands of the Iraqi interim government but with the US troops, which seemed to be preparing for the fullscale offensive by launching repeated small-scale attacks on the town.
The US army would most probably use more troops than it used last April in an effort to remove one of the key symbols of resistance in Iraq, but the fact remains that Falluja is only a small town, and its fall can hardly be considered an end to Iraqi resistance, he said.