The fierce military campaign in Falluja, launched last month to wipe out the resistance, forced most of the city's 300,000 people to leave their homes for Baghdad or nearby cities like Habaniya, about 20km south of Falluja.

About 1500 displaced Falluja residents demonstrated in Habaniya demanding to return to their city, parts of which sustained heavy damage during the military operation last month.

US and Iraqi officials have pledged to reconstruct areas devastated by the fighting.

During the protest, fliers were distributed in the name of a group, Jaish Muhammad ( Muhammad's Army), which US officials claim is an umbrella group for former intelligence agents, army and security officials, and Baath Party members.

The statement was released in the name of the group's leadership, but could not be independently verified.

Stalling

The statement said the resistance had been lying low for a "few days" but were planning to resume attacks against US-led forces.

The group also threatened to kill Iraqis aiding the troops and warned the interim government's forces that they would be attacked with similar fury as that directed against the US military.

"The so-called (Iraqi) National Guard has gone too far in harming our people," the statement said. "They have renounced their religion ... and thus they should be fought in the same manner as the infidels."

The statement said Jaish Muhammad fighters had agreed with other groups "to decrease the operations against the occupiers ... for a few days to close ranks, boost morale and prepare for unending war against the occupiers ... and against anyone who cooperates with them."

Last month, interim Prime Minister Iyad Allawi said Jaish Muhammad leaders had been arrested and that the group was known to have cooperated with al-Qaida-linked Abu Musab al-Zarqawi, and Saddam Hussein loyalists.