US helicopters attacked armed men holed up inside the buildings, where US and Iraqi forces said they killed more than 100 fighters earlier this month.
Lamb said Wednesday's operation involved US forces and the Iraqi police and army.
US armoured vehicles firing their heavy machine guns joined the fighting and troops also fired mortars after coming under machinegun, mortar and rocket-propelled grenade attack during the operation to restore Iraqi security control to the Sunni stronghold.
"A lot has been coming from high-rise buildings. We are firing at terrorists in those buildings," Lamb said.
'Campaign of genocide'
The Association of Muslim Scholars condemned the raid, calling it "a campaign of genocide" and said a number of buildings had been demolished and people killed.
The US military said Wednesday's mission was "not an operation designed solely to target Sunni insurgents, but rather aimed at rapidly isolating all active insurgents and gaining control of this key central Baghdad location".
"Bush's strategy has failed totally in Iraq"
Dimos, Hania-Crete, Greece
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Meanwhile, a US soldier and two marines have been killed in Iraq, the military said, raising its losses this month to 53.
The soldier was shot dead and two were wounded on Wednesday while on patrol in central Baghdad, a statement said.
Security sources said a helicopter owned by Blackwater, a US security company, that crashed in the area on Tuesday was forced down after the pilot was shot dead.
Three others on board the aircraft, which had been guarding a diplomatic convoy on the ground, may have been shot on landing, they said, although other reports suggested they died when the aircraft crashed.
A fifth person on a second Blackwater helicopter was also shot dead.
Zalmay Khalilzad, the US ambassador to Iraq, paid his condolences to the security contractors, who helped protect US embassy personnel, saying he had known them personally.
"We lost five fine men. It was a very bad day yesterday."