Iraqi officials also announced on Monday that one of Saddam Hussein's nephews was sentenced to life in prison for funding the armed anti-government campaign and would stand trial on other charges.
Authorities said they had already uncovered a cache of explosives and arrested four people for allegedly planning attacks on the pilgrims attending festivities on Monday marking the birthday of the 12th Shia imam, Mohammed al-Mahdi.
Similar gatherings in Karbala and other Shia holy cities have ended in tragedy. In December, more than 50 pilgrims were killed in a series of bombings in Karbala, 80km south of Baghdad, and in March, 181 people died in coordinated bombings of Shia pilgrims in Karbala and Baghdad.
Both attacks were blamed on Sunni groups. Days before this celebration, al-Qaida in Iraq leader Abu Musab al-Zarqawi, in a recorded message, declared an all-out war on Shias and others deemed American collaborators.
The Mahdi Army is one of two
militias providing security
But Iraqi Vice President Adil Abdul-Mahdi said on Monday that such threats would only "strengthen the defiance" of Iraqis.
The explosives cache near Karbala was discovered late on Sunday on farmland on the outskirts of the city, said police spokesman Rahman Mishawi.
Three "non-Iraqi Arabs" were arrested, Mishawi said, along with a man armed with several hand grenades who was caught walking with a procession of pilgrims.
City closed off
Authorities were taking no chances this time. Karbala police said Brigadier General al-Hasnawi said that the city had been closed off to all vehicles since Friday, and that about 6000 police and Iraqi army troops were deployed throughout the city.
Policewomen would be on hand to search female pilgrims and non-residents were required to obtain prior approval from authorities before being allowed to check into local hotels, he said.
An Iraqi soldier takes position in
Baghdad amid tight security
Officials said they expected more than a million people to gather for the celebration.
As the festival continued, al-Qaida in Iraq leader al-Zarqawi purportedly issued a new vow, promising he would not attack followers of Shia cleric Muqtada al-Sadr and other Shia leaders opposed to Iraq's US-backed government.
An internet statement which appeared on Monday night on a website known for carrying extremist Islamist material, singled out three Shia clerics and their followers who were exempted from the declaration of war: al-Sadr and Baghdad-based anti-US religious leaders Jawad al-Khalisi and Ahmed al-Hassani al-Baghdadi.
The statement could not be immediately authenticated.
In the day's other major development, the Iraqi government announced that Ayman Sabawi, Saddam's nephew, had been "sentenced to life in prison for funding militants and possessing and manufacturing roadside bombs".
Sabawi, the son of Saddam's half-brother Sabawi Ibrahim al-Hassan, who served as a presidential adviser before the US-led invasion, was captured in early May. But authorities had not announced that his trial was under way.
The Iraqi Central Criminal Court in Baghdad said Sabawi would face a second trial, beginning on 1 November, for other, unspecified crimes to which he allegedly confessed during pre-trial interrogation.
His colleague, Tareq Khalaf Mizal, arrested along with Sabawi, was sentenced to six years.
Sunni negotiator Salih al-Mutlaq
has launched a signature drive
Also on Monday, two car bombs killed eight people travelling on the road from Baghdad to Karbala.
The bombs struck in the towns of Mahmudiya and Latifiya, killing one civilian and seven policemen.
In other news, a member of the Iraqi National dialogue Council, Salih al-Mutlaq, announced on Monday the creation of a national front to collect five million signatures rejecting the Iraqi draft constitution.
Al-Mutlaq has described the current constitution draft as showing neither wisdom nor proper evaluation of the risks.
He said leading figures including tribal chiefs, civil rights organisations and trades union have agreed to work together to collect signatures.