Thousands of Iraqis loyal to radical Shiite cleric Moqtada al-Sadr flock to the holy city of Najaf on Saturday, as a ceasefire continued in the city to allow for peace talks between the battling sides.

Busloads of Iraqis came to Najaf, led by Sheikh Hazem al-Araji, a senior Sadr aide in Baghdad, who had urged people during Friday's weekly prayers to march to Najaf in protest against the US assault.

The open-ended ceasefire was to allow negotiations to end the military showdown between Sadr's Mehdi Army and a joint Iraqi-US force.

Talks were taking place between the US forces, Iraqi security troops, the Iraqi government's negotiator, and Sadr's aide.

The US military said it had suspended offensive operations against Sadr's fighters, who were holed up in the city's sprawling cemetery and the Imam Ali shrine, one of the holiest sites to Shiite Muslims.

More than a week-long offensive on Najaf caused outrage throughout Iraq and much of the Arab world as protesters took to the streets and voiced resentment of the heavy-handed approach of the US forces in and around the city.

On Friday, a slightly wounded Sadr from early morning US shelling of Najaf demanded the resignation of the interim Iraqi government, calling it "dictatorial" and saying it was worse than the Baathist government of Saddam Hussein.