After seven weeks of bitter fighting, U.S. officials said Thursday they will suspend offensive military operations against the Mahdi militia of Shiite cleric Moqtada Sadr around the holy city of Najaf and reposition U.S. troops there.

In return, Sadr has said his militia will end what he called "armed demonstrations" against the U.S. occupation and allow Iraqi security forces to police the city unhindered.

(snip)

Brig. Gen. Mark Kimmitt, deputy commander of U.S. forces in Iraq, compared the development Thursday to the agreement earlier this month that brought relative quiet to the Sunni city of Fallujah, where U.S. Marines had engaged in ferocious combat with insurgents through March and April.

The Fallujah cease-fire "has held since May 3," Kimmitt said. "We're hoping to see the same thing in Najaf."

FALLUJAH, Iraq (AP) - With U.S. marines gone and central government authority virtually nonexistent, Fallujah resembles an Islamic mini-state - anyone caught selling alcohol is flogged and paraded in the city. Men are encouraged to grow beards and barbers are warned against giving "western" hair cuts.

"After all the blood that was shed, and the lives that were lost, we shall only accept God's law in Fallujah," said cleric Abdul-Qader al-Aloussi, offering a glimpse of what a future Iraq may look like as the U.S.-led occupation draws to a close. "We must capitalize on our victory over the Americans and implement Islamic sharia laws."

The departure of the marines under an agreement that ended the three-week siege last month has enabled hardline Islamic leaders to assert their power in this once-restive city 50 kilometres west of Baghdad.

Some were active in defending the city against the marines and have profited by a perception - both here and elsewhere in Iraq - that the mujahedeen, or Islamic holy warriors, defeated a superpower.