US warplanes pounded Falluja yesterday as ground forces battled guerrillas on the outskirts of the rebel-held city that American and Iraqi forces were poised to storm.

Iraq’s interim Prime Minister Iyad Allawi, declaring a 60-day state of martial law on Sunday to rein in an insurgency that threatens planned nationwide elections in January, said a move to retake Falluja could not be delayed much longer. An AC-130 gunship struck Falluja with cannon fire and machineguns as US forces massed on two sides of the city where the US military says 1,000 to 6,000 fighters – Saddam Hussein supporters and foreign Islamic militants led by Jordanian al Qaeda ally Abu Musab al-Zarqawi – are holed up.

The Iraqi 36th Command Battalion seized the main hospital in Falluja, blindfolding a number of people and kicking down doors but not firing a shot. Later, fighting erupted in Falluja and artillery shelling and exchanges of gunfire were heard from US positions near the Sunni Muslim city, some 50 km (30 miles) west of Baghdad, said a Reuters witness.

A US Marine tank company and infantry unit moved to a staging area near Falluja as US forces said they only awaited word from Allawi, who heads a US-backed Iraqi interim government, to begin an assault. “He still hopes that it may be possible to avoid a major military confrontation in Falluja ... He is, however, not optimistic,” said Allawi spokesman Thair al-Naqib.

Earlier, witnesses said there was heavy fighting on the eastern and western fringes of the city, including around a bridge over the Euphrates. “These insurgents are going to get a lot more than they bargained for,” said US Gunnery Sergeant Christopher GarzaGarza, 30, from Houston, Texas. Guerrillas in other Iraqi cities and towns have stepped up attacks to show their muscle.

Police said gunmen killed 22 policemen in three attacks on Sunday. The bloodiest was on the Haqlaniya post near Haditha, 200 km (125 miles) northwest of Baghdad, where insurgents lined nine policemen against a wall and shot them, witnesses said. A group led by Zarqawi claimed responsibility for the attack, according to a statement posted on a Web site often used by Islamists.

Allawi declared the state of emergency across Iraq, except the region of Kurdistan, to ensure security before the Jan. 27 elections US President George W. Bush says will be a cornerstone in building a democratic Iraq. “(The martial law decree) will send a very powerful message that we are serious,” Allawi told reporters. “We want to secure the country so elections can be done in a peaceful way.”

Giving itself power to declare emergency rule, equivalent to martial law, was one of the first things the government did after replacing a US-led occupation administration on June 28. But this is the first time it has used the power. Allawi did not say how he would use the new powers, but emergency rule gives the government the right to impose curfews, set up checkpoints, and search and detain suspects.

Moments after the announcement, a car bomb exploded near the house of Finance Minister Adel Abdul Mahdi in Baghdad’s Karrada district, killing a policeman and a ministerial bodyguard. Abdul Mahdi was not hurt. Insurgents also kept up attacks on US-led forces and Iraqis working for them.

An American soldier was killed and another wounded when their convoy was attacked west of Baghdad and a car bomb killed another US soldier and wounded four in western Baghdad. A suicide bomber drove into a US convoy on the Baghdad airport road in an attack also claimed by Zarqawi’s group. The bodies of three Iraqi translators for US forces were found in Tikrit, north of Baghdad, police said.

<B>Michael Georgy</B>