BAGHDAD – Automatic gunfire sounded from all directions and red tracer bullets arched through the night sky over Baghdad, but for once there was nothing to fear.

Iraq’s soccer players had just completed a 1-0 Olympic quarter-final victory over Australia to extend an unlikely dream run at the Athens games, and Iraqis were celebrating as Iraqis are wont to do.

Amidst the mayhem that has engulfed much of the country since the American-led invasion 16 months ago, the exploits of an unheralded team have captured the imagination of the people and restored a sense of normality for 90 minutes.

Even in Najaf, where American marines and Muqtada al-Sadr’s Mahdi Army have been engaged in fierce battles for more than a fortnight, there seemed to be a lull in the fighting when Iraq stunned Euro 2004 finalists Portugal with a 4-2 victory last week.

The few residents who have stayed on crowded around TV screens, hoarsely celebrating each goal. The scenes were similar as Emad Mohammed’s 64th minute goal on Saturday evening gave Iraq a slim lead over Australia – the first opposition from a country that has been a major military contributor to coalition forces.

As cheers echoed from surrounding buildings, Mr. Haider, a waiter in a hotel restaurant, came rushing in to a small office where his colleagues were watching the game, carrying a tray laden with hummus and Carlsberg beers.

“Have we scored?” he shouted, his face breaking into a grin as the replay answered his question. Slamming the tray on to a table, he hugged Mr. Ahmed, the hotel’s jolly receptionist who was shaking his head in disbelief.

“Kofi Annan said all countries were equal at the start of every Olympic competition,” Mr. Ahmed said. “We were equal, but now we are a superpower. When we have won our gold medal, we must play the United States and see who is the master now.”

Iraq’s progress is astonishing. Unable to play any home matches before the Games – it is too unsafe for foreign opposition to visit Iraq – the team had little match practice before it traveled to Athens.

Practice sessions were conducted on an uneven field shared with goats and sheep. German coach Bernd Stange, who guided his players through Olympic qualifiers, was forced to quit after receiving death threats. For many years Iraqis were banned from competing in the Olympics. Perhaps that was just as well. Uday Hussein, the widely feared son of Saddam, headed the country’s Olympic committee and had competitors considered to be under-performing tortured and imprisoned.

The team is now playing with giant slaying confidence. With only one Olympic medal in its cupboard – a 1960 weightlifting bronze – a semi-final victory over Paraguay this week will ensure more silverware and a scintillating showdown with either Argentina or Italy.

“I cannot believe how well they are doing, God be praised,” said Ali Mazen, a Baghdad shopkeeper. “We cannot forget our problems but for a little while we can be proud and we can smile. We can pretend our nightmares are over.”