The town of about 1000 families, evenly divided between Shia and Sunnis, sits about 20km south of the capital Baghdad in what the US military has called the "triangle of death" because it has become a stronghold for anti-US fighters.

An AP photographer and a television cameraman who were in or near al-Madain on Sunday said large numbers of Iraqi troops had sealed off the town, supported by US forces who were keeping a low profile farther from the edge of town.

The cameraman said he toured the town on Sunday morning. People were going about their business normally, shops were open and tea houses were full.

Residents contacted by telephone also said everything was normal in al-Madain.

Major assault

Even so, National Security Minister Qasim Dawud told parliament on Sunday that three battalions of Iraqi soldiers, police and US forces had been sent to al-Madain.

Some Iraqi legislators have been
demanding a tough response

He said the Iraqi military was planning a large-scale assault.

Adding credence to concerns of a major civil conflict, Defence Ministry official Haidar Khayun said early on Sunday that Iraqi forces raided the town and freed about 15 Shia families and captured five hostage-takers in a skirmish with light gunfire.

He said there were no casualties.

But Aljazeera quoted Dawud as telling the Iraqi National Assembly: "Three places where people were reportedly being held were raided, but unfortunately we did not find any hostages."

For his part, Iraq's most influential Shia Muslim cleric, Grand Ayat Allah Ali al-Sistani, urged government officials to resolve the crisis peacefully, his office said.

No hostages

By the end of the day, Iraqi officials had produced no hostages, and Iraqi military officials who had given information about the troubles in al-Madain could not be reached for further details.

US military officials too said they were unaware of any US role in what had been described as a tense sectarian standoff in which Sunni fighters were threatening to kill their Shia hostages if all other Shia did not leave the town.

"This news is completely untrue"

Shaikh Abd al-Salam al-Kubaisi, Association of Muslim Scholars

Speaking to Aljazeera by phone from Baghdad, general-secretary of the Iraqi Islamic Party (IIP), Tariq al-Hashimi, said the situation was dangerous and could spark wider sectarian tensions.

Urging security forces to exercise caution, he said: "Whatever the reasons - so far mostly they seem fabricated and exaggerated - we completely reject the latest escalation in the form of the siege of the town with a view to raiding it."

Al-Hashimi said a "new Falluja" could arise, with the US and Iraqi forces raising the banner of "fighting terrorism".

Nevertheless, he called on both Sunni and Shia residents of al-Madain not to confront the Iraqi police and soldiers, and to let them carry out their mission to search for hostage-takers if there were really any present.

Doubts cast

Separately, Shaikh Abd al-Salam al-Kubaisi, a spokesman for the mainly Sunni Association of Muslim Scholars, denied hostages had been taken in al-Madain. "This news is completely untrue," he told Aljazeera on Sunday.

Whatever is happening in al-Madain began on Thursday when Shia leaders said Sunni fighters seriously damaged a town mosque in a bomb attack.

The al-Madain report has triggered
fresh sectarian tensions in Iraq

The next day, it was said, masked fighters drove through the town, capturing Shia residents and threatening to kill them unless all Shia left.

Shia leaders and government officials had earlier estimated 35 to 100 people were taken hostage, but residents disputed the claim, with some saying they had seen no evidence of any hostages taken.

Security forces began raiding sites on Saturday in search of those abducted, Dawud said.

Elsewhere in the country on Sunday, anti-government fighters killed eight Iraqis in attacks across the country.

The US military said three US soldiers were killed and seven wounded after fighters fired mortar rounds late on Saturday at a US marines base near Ramadi, 115km west of Baghdad.

Civilian deaths

Late on Sunday, loud explosions were heard again from the direction of the base, but the US military had no immediate information on what was happening.

The assault raised to 24 the number of people who died in Iraq on Saturday, including an American civilian, an Iraqi and another foreigner who died in a car bombing in the capital.

"We completely reject the latest escalation in the form of the siege of the town with a view
to raiding it"

Tariq al-Hashimi,
Iraqi Islamic Party

The US embassy identified the American as Marla Ruzicka, founder of the Washington-based Campaign for Innocent Victims In Conflict.

The group began a door-to-door survey trying to determine the number of civilian casualties in Iraq soon after the US-led invasion in 2003.

Allawi's terms

The distracting events surrounding al-Madain erupted as interim Prime Minister Ibrahim al-Jafari, a Shia leader, was trying to get members of Iraq's Sunni minority into a new cabinet.

Meanwhile, former interim prime minister Iyad Allawi said his secular list would be willing to join the new Iraqi government provided it was given a security-related portfolio, such as the Defence or Interior Ministry, in addition to three other cabinet berths and a deputy prime ministerial position.

He said his list had communicated these demands to the United Iraqi Alliance and the Kurdish alliance, and that the decision to join the government would be taken if it received a positive response.