Sources close to the Pentagon said Iraqi forces would take the lead, supported by American air power, special operations, intelligence, embedded officers and back-up troops.

Helicopters suitable for urban warfare, such as the manoeuvrable AH-6 "Little Birds" used by the marines and special forces and armed with rocket launchers and machineguns, are likely to complement the ground attack.

The sources said American and Iraqi troops would move from neighbourhood to neighbourhood, leaving behind Sweat teams - an acronym for "sewage, water, electricity and trash" - to improve living conditions by upgrading clinics, schools, rubbish collection, water and electricity supplies.

Sunni insurgent strongholds are almost certain to be the first targets, although the Shi'ite militias such as the Mahdi army of Moqtada al-Sadr, the radical cleric, and the Iranian-backed Badr Brigade would need to be contained.

President George W Bush and Donald Rumsfeld, the defence secretary, are under intense pressure to prove to the American public that Iraq is not slipping into anarchy and civil war. An effective military campaign could provide the White House with a bounce in the polls before the mid-term congressional elections in November. With Bush's approval ratings below 40%, the vote is shaping up to be a Republican rout.

The Iraqi government, when it is finally formed, will also need to demonstrate that it is in charge of its own seat of government. "It will be the second liberation of Baghdad," said Daniel Gouré, a Pentagon adviser and vice-president of the Lexington Institute, a military think tank. "The new government will be able to claim it is taking back the streets."

Larry Wilkerson, former chief of staff to Colin Powell at the State Department, said a crackdown in Baghdad was one of the few ways in which a fresh Iraqi government could bind the new national army and prove its mettle.

"They have to show they can liberate their own capital," he said. "Baghdad is the key to stability in Iraq. It's a chance for the new government to stand up and say, 'Here we are'. They can't do that if they are hunkered down in bunkers."

The operation is likely to take place towards the end of the summer, giving the newly appointed government time to establish itself. If all goes to plan, US troop withdrawals could take place before the end of the year. In the absence of progress by then, the war may come to be seen by the American public as a lost cause.

There are 140,000 US troops in Iraq. Lieutenant-General John Vines, who stepped down as commander of ground forces in Iraq at the beginning of this year, said it was essential to reduce the numbers.

"There is an incredible amount of stress and I'm worried about it," said Vines. He added that soldiers were on their third or fourth tours of duty in Iraq: "The war has been going on nearly as long as the second world war and we're asking a lot of the forces."

U.S. officials believe the best way to stem the violence is for the Iraqis to establish a government comprising Shiites, Sunnis and Kurds, paving the way for the United States to start withdrawing its 133,000 troops.

But progress has stalled over Sunni and Kurdish opposition to the Shiite choice of Prime Minister Ibrahim al-Jaafari to head the new government. With al-Jaafari refusing to step aside, acting speaker Adnan Pachachi called a parliament session for Monday, hoping the full legislature could agree on a new leadership after the politicians failed.

On the eve of the session, Pachachi announced a delay of "a few days" to give the religiously and ethnically based parties more time to agree on the new prime minister, president and five other top posts that require parliamentary approval.

Before the announcement, Shiite official Hussain al-Shahristani told Sunni and Kurdish leaders that his bloc, which controls 130 of the 275 parliament seats, would decide what to do about al-Jaafari "within the coming two days," Kurdish legislator Mahmoud Othman said.

Majority Shiites have been giving similar assurances for the past two weeks, and it was unclear how soon the issue could be settled.

Voters chose the new parliament Dec. 15, but the legislature met briefly only once last month.

The bitter fight over al-Jaafari has heightened friction among the rival parties, raising the spectre of deadlock over other top jobs. Some Shiite officials say that if they must change their nominee for prime minister, other parties may not win approval of their first choices for major posts either.

For example, the Shiites rejected the Sunni nominee for parliament speaker, Tariq al-Hashimi. Disputes also emerged Sunday over the two deputy speakers and two vice-presidents - jobs expected to go to Sunnis and Kurds.

"This delay will affect everything," Sunni legislator Naseer al-Ani said. "The Shiites did not tell us the reasons behind rejecting al-Hashimi like we did about al-Jaafari. We're still waiting to hear the reasons."

Pressure has been mounting on the Shiites to replace al-Jaafari, whom critics accuse of failing to curb sectarian tension that has soared since the Feb. 22 bombing of a Shiite shrine in Samarra, which triggered a wave of reprisal attacks against Sunnis.

Shiite politicians not affiliated with major parties have proposed that al-Jaafari step aside in favour of another candidate from his Dawa party. In return, the biggest Shiite party, the Supreme Council for the Islamic Revolution in Iraq, would not push Vice-President Adil Abdul-Mahdi for the post.

However, Dawa leaders complained of interference by outsiders and insisted they should decide al-Jaafari's fate, according to several Shiite officials who spoke on condition of anonymity because the negotiations were at a sensitive stage.

In an interview Sunday on CNN's Late Edition, Iraq's ambassador to the U.S., Samir Sumaidaie, said Shiite legislatort Ali al-Adeeb had emerged as a possible prime minister candidate. Al-Adeeb is a member of al-Jaafari's party but spent many years in Shiite-dominated Iran - which could cause problems with the Sunnis.

Al-Jaafari won the nomination in a vote last February by Shiite legislators due to strong support from radical anti-American cleric Muqtada al-Sadr. The mercurial young cleric, who heads the dreaded Mahdi Army militia, has vowed to stand behind the incumbent.

With little progress on the political front, Iraq's slide toward chaos continued.

Four marines - three from Regimental Combat Team Five and one from the 2/28 Brigade Combat Team - died Saturday in Anbar province, the U.S. command said Sunday.

Their deaths raised to at least 2,376 the number of U.S. military members who have died since the war began in March 2003, according to an Associated Press count.

At least 10 people died in a car bombing near a Shiite mosque in an outdoor market in Mahmoudiya, 30 kilometres south of Baghdad, police said. Three others were killed when a bomb exploded on a minibus in a Shiite area of eastern Baghdad, police said.

Earlier Sunday, six people were killed when U.S. troops stormed a house looking for an al-Qaida suspect in Youssifiyah, 20 kilometres south of Baghdad, the U.S. military said. Six people, including the suspect, were arrested. The military didn't identify the suspect but said he worked with foreign fighters to plan bombings.

Iraqi Sunni and Kurdish groups have rejected the choice for prime minister of the country's powerful Shiite majority, outgoing premier Ibrahim Jaafari, while in a tit-for-tat political move the Shiites are opposing Sunni candidates for other posts.

The Sunni and Kurdish minorities accuse Jaafari of failing to curb the raging sectarian violence that has left hundreds dead since the bombing of a revered Shiite shrine in Samarra on February 22.

In turn, the Shiite parties suspect the country's Sunni parties of having one foot in the political establishment and the other in the camp of Iraq's three-year insurgency that has targeted Shiites with bombings and shootings.

"The political crisis has deepened," Kurdish lawmaker Mahmoud Othman told AFP.

"The issues are not resolved. There is no agreement on Jaafari yet and the other problem is that the Shiite list has opposed the Sunni candidate for the post of parliament speaker."

The Sunni-led National Concord Front, which has 44 seats in parliament, had proposed the name of Tareq al-Hashemi, the head of the popular Iraqi Islamic Party, to be the next parliament speaker.

Political factions had been expected to reach consensus on Sunday ahead of Monday's parliament session, but their quarreling led to the cancellation of the meeting. The 275-member parliament has met only once since Iraq's December 15 election.

"We decided to postpone for a few days the holding of the parliament," said MP Bassem Sharif, a member of the parliament's biggest bloc, the Shiite United Iraqi Alliance, which has 128 seats.

The decision was taken "to give time to all the parliamentary blocs to finalise their candidates and reach an agreement on all the parliamentary posts," he added.

Baghdad's new ambassador to Washington, Samir Sumaidaie, told CNN Sunday that a replacement to Jaafari was likely to be decided upon in the coming days.

"A number of names have been mentioned. But leading amongst them is Ali al-Adib, who is from Jaafari's own party," Sumaidaie said, adding that he "would stand for the same things that Jaafari stands for."

The deadlock has coincided with a surge in violence that has raised fears the country is on the edge of an all out civil war, with its political leaders, bound by religious and ethnic loyalties, utterly incapable of forging ahead.

Sunnis believe the Shiite-led government has stocked the interior ministry with death squads that are killing members of their minority community, which enjoyed benefits under the rule of deposed president Saddam Hussein.

On Monday, Saddam's trial in Baghdad on charges of crimes against humanity resumed after a five-day break, but was quickly adjourned until April 19.

The prosecution was granted more time to prove the authenticity of the deposed Iraqi leader's signature on execution orders for Shiites from the village of Dujail who were killed after an assassination attempt on Saddam's life in 1982.

In violence, insurgents staged fresh attacks killing two people early Monday.

A civilian was killed in central Baghdad when a roadside bomb struck a passing Iraqi army patrol, while another Iraqi was killed in overnight clashes between insurgents and soldiers.

It was immediately unclear whether the dead man was a civilian or an insurgent.

On Sunday, at least 31 people were killed in a string of attacks in Iraq, including bombings and shootings against a market and two minibuses.

Fifteen Iraqis were kidnapped from two businesses in Baghdad by armed men, some of them dressed in police uniforms, and were driven away in police cars, security sources said.