Iraq was on the brink of an all-out assault on rebel-held Fallujah on Sunday as deadly clashes erupted between US troops and insurgents in the neighbouring city of Ramadi. Japan, meanwhile, vowed that Japanese troops would stand firm in Iraq after militants demanding a pullout killed a 24-year-old Japanese tourist, and Poland rejected a similar desperate plea made by a Polish woman also held hostage.
Prime Minister Iyad Allawi has pledged to restore order in the country ahead of national elections promised by January and is ready to use force, if necessary, with the support of US-led forces.
"We have entered the final phase to solve the Fallujah problem," said Allawi.
"If we cannot solve it peacefully, I have no choice but to take military action. I will do so with a heavy heart," he told a news conference in Baghdad.
Allawi said he met on Saturday night with religious and tribal leaders from the Sunni Muslim insurgency bastions of Fallujah and Ramadi, west of Baghdad, and the northern city of Mosul.
He said they all wanted the government to assert its authority in these hotspots.
The prime minister laid out three conditions that would spare Fallujah and other rebel cities military action.
These include the exit of foreign fighters and insurgents, the handover of heavy- and medium-sized weapons and allowing the government to begin the process of reconstruction in these cities.
In a sign of progress, the prime minister announced that 167 foreign fighters, including Syrians and Sudanese had been arrested in Iraq, though he failed to specify where, and confirmed the killing of four leaders in the militant group of Abu Musab al-Zarqawi.
Both the Iraqi and US governments say Fallujah is in the grip of operatives loyal to Zarqawi, Iraq's most wanted man, who is accused of some of the worst attacks in the violence-plagued country over the past few months.
"The people of Fallujah can handover foreign fighters and insurgents, kick them out or allow Iraqi forces to go in and do the job," said Allawi in a grave tone.
"The Iraqi government is still holding the olive branch ... but there will be no dialogue with Zarqawi, bin Laden and former regime loyalists."
Since October 14, US troops have encircled Fallujah, where the military has repeatedly launched air strikes and some limited ground incursions, they are also doubling their troop strength to 2,000 in neighbouring Ramadi.
Fifteen Iraqi civilians were killed and about eight wounded on Sunday when insurgents fired a rocket in the northern city of Tikrit, the US military said.
The rocket, one of two fired by the insurgents, landed near a mosque at about 7:50pm, shortly after the end of evening prayers, Captain Bill Coppernoll of the US Army's First Infantry Division public affairs office said.
At least 10 Iraqis were killed when fighting erupted between rebels and US troops in Ramadi, 100 kilometres west of Baghdad, medics and an AFP reporter said.
In the latest slaughter, Iraqi police found the head and decapitated body of a 24-year-old Japanese backpacker in a notorious area of Baghdad on Saturday evening - one week after Shosei Koda was paraded on Arabic television by a Zarqawi group.
His hands and feet had been bound and the remains wrapped in a US flag.
Koda became the first Japanese hostage to be executed in Iraq after Tokyo refused to bow to his kidnappers' demands to pull its 550 troops from the country.
"It is our utmost regret that Mr. Shosei Koda fell victim to terrorism although the Japanese government made every possible effort to rescue the hostage," Prime Minister Junichiro Koizumi said. "I offer my sincere condolences to his family."
In a separate crisis, a Polish woman held hostage by a militant group in Iraq was shown in a video on Al-Jazeera TV Saturday night pleading anew for the withdrawal of Polish troops and the release of women prisoners to save her life.
A close ally of Washington in Iraq, Poland commands a multinational military force in a sector south of Baghdad and has sent 2,500 of its own soldiers, making it the fifth-largest contributor to the US-led coalition force.
A Sudanese working as an interpreter for a US company along with truck drivers from Bangladesh, Sri Lanka and Somalia have also joined a long list of victims.