NAJAF, Iraq – Radical cleric Muqtada al-Sadr ordered his fighters yesterday to hand control of a revered Najaf shrine to top Shiite religious authorities, hours after American forces bombed insurgent positions and Iraq’s prime minister made a “final call” for the cleric’s fighters to surrender.

Blasts and gun battles persisted throughout the day yesterday in the streets of Najaf, and at night at least 30 explosions shook the Old City as an American plane hit insurgent targets east of the Imam Ali shrine. Earlier, rebels bombarded a Najaf police station with mortar rounds, killing seven police and injuring 35 others.

American forces also battled Mr. al-Sadr’s supporters in a Baghdad slum, where insurgents said five fighters and five civilians were killed. Also, late yesterday, an American warplane bombed targets in the Sunni city of Fallujah, 40 miles west of Baghdad.

Insurgents fired back mortars toward an American base as calls of “God is Great” and Koranic verses blared from the loudspeakers of Fallujah’s mosques. American forces have routinely bombed targets in the city it says are strongholds of Sunni insurgents believed responsible for violence against coalition troops, Iraqi forces, and civilians.

Insurgents elsewhere in Iraq attacked oil facilities in the north and south, fired mortars at American Embassy offices in the capital, injuring one American, and threatened to kill two hostages, a Turkish worker, and an American journalist.

In a speech, interim Prime Minister Allawi had warned the radical cleric to disarm his forces and withdraw from the shrine after his government threatened to send a massive Iraqi force to root them out.

Defying that ultimatum, Mr. al-Sadr sent a telephone text message vowing to seek “martyrdom or victory,” and his jubilant followers inside the shrine danced and chanted.

Later in the day, a top al-Sadr aide said the cleric had ordered his militia to leave the shrine, where they have been holed up for two weeks fighting Iraqi and American forces. But in a letter shown by the Arab television station Al Jazeera, Mr. al-Sadr said he would not disband his Al Mahdi Army.

The violence in the holy city between the insurgents and a combined American-Iraqi force has angered many in Iraq’s Shiite majority and proven a major challenge to Mr. Allawi’s fledgling interim government as it tries to build credibility and prove it is not an American puppet.

Any raid to oust insurgents from the Imam Ali shrine – especially one that damaged the holy site – could spark a far larger Shiite uprising. Government accusations that rebels have mined the shrine compound and reports that women and children were among those inside could further complicate a raid.

Some of those in the compound were “dancing and cheering,” a CNN journalist reported from inside the shrine, where she was among journalists escorted there with help from the Iraqi government, the American military, and Mr. al-Sadr’s Mahdi Army.

“They are all very proud to be in here and seem to be very adamant about staying in here,” CNN reporter Kianne Sadeq said. “They aren’t going anywhere until the fighting is over.”

In the impoverished Baghdad neighborhood of Sadr City – named for the cleric’s late father – American tanks moved throughout the streets and helicopter gun ships shot at al-Sadr insurgents from the skies. The rebels claimed five fighters and five civilians were killed.

There was no certainty that the latest offer from Mr. al-Sadr to withdraw would be implemented, as both sides appeared to be engaged in brinkmanship.

Yesterday’s violence came a day after Mr. al-Sadr had accepted an Iraqi delegation’s peace plan for Najaf demanding he disarm his rebel army, leave the shrine, and turn to politics in exchange for amnesty. But he continued to attach conditions the government rejected, and fighting persisted.

Reiterating his government’s refusal to negotiate with the armed terrorists, Mr. Allawi had called on Mr. al-Sadr to personally accept the government’s demands to end the Najaf fighting – not through aides or letters as he has been communicating so far.

“When we hear from him and that he is committed to execute these conditions we will…give him and his group protection,” the prime minister said in a Baghdad news conference.

In Washington, the Bush administration said Mr. al-Sadr needed to match words with deeds. “We have seen many, many times al-Sadr assume or say he is going to accept certain terms and then it turns out not to be the case,” said the national security adviser, Condoleezza Rice.