US forces also shot dead seven women and children after the civilian vehicle in which they were traveling failed to stop at a military checkpoint south of Baghdad.

In the south, British forces attacked the outskirts of the port city of Basra, seen as a key to controling southeast Iraq, but said they were waiting for reinforcements before making a final push.

Pentagon official Major General Stanley McChrystal said most of the 1,000 air sorties launched in Iraq Sunday were against the four Republican Guard divisions positioned around Baghdad.

"We are seeing significant degradation of those forces," McChrystal said.

War planes battered Baghdad and its southern outskirts for the 12th straight day Monday, with two missiles crashing into Saddam's sprawling Republican Palace compound, the first such strike in broad daylight.

Hospital sources said coalition bombing of a residential neighborhood in the capital left six Iraqi civilians dead and dozens more wounded.

Residents of a village on the southeastern edge of Baghdad said that 20 people, including 11 children, were killed and 10 other hurt at the weekend during a nighttime missile attack on a farm.

South of the capital, US troops massing for a decisive push toward Saddam's seat of power on Monday reported their first serious fighting with Iraq's crack Republican Guard, considered Saddam's most determined military unit and key to the defense of Baghdad.

US officers said 200 Iraqis were killed, wounded or captured in the clashes which broke out overnight near Karbala, 80 kilometers (50 miles) from Baghdad.

Colonel Will Grimsley, of the US Army's 3rd Infantry Division, said there had been sporadic encounters earlier with elements of the Guard, but noted: "This is the first serious contact."

Reports of the battle around Karbala came as US armored units finalized plans for a decisive thrust toward Baghdad within a week, commanders said, with forces concentrated near Najaf, 150 kilometers (95 miles) to the south.

The US army's elite 101st Airborne Division clashed with Iraqi forces near Najaf, with Apache and Kiowa Warrior helicopters backing ground troops and striking military targets in and around the Shiite Muslim holy city.

US troops said they opened fire Monday on a civilian vehicle at a checkpoint in Najaf, killing seven women and children, and wounding two.

The vehicle failed to stop despite repeated warning shots fired by US troops, a military official said.

McChrystal said Republican Guard formations were moving around the battlefield, apparently to reinforce other forces that have been significantly weakened by air strikes.

US President George W. Bush said the day of victory was drawning closer.

"Many dangers lie ahead, but day by day we are moving closer to Baghdad. Day by day, we are moving closer to victory," he said at a ceremony in Philadelphia, Pennsylvania.

But British troops faced stiff resistance in Basra.

British commanders said 600 soldiers backed by tanks and armored vehicles were battling to punch through the town of Abu Al Khasib, 20 kilometersmiles) to the southeast of Basra, as British artillery pounded Basra's western edge.

An Iraqi military spokesman said at least 54 US and British soldiers had been killed in fighting since Sunday, most of them around Basra, with an unspecified number of others killed in other parts of Iraq.

US and British military sources put the death toll at 25 British and at least 39 US soldiers killed since the start of the war on March 20.

Three US troops were wounded Monday, one seriously, after Iraqi soldiers used a Red Crescent ambulance to stage an attack at a town north of Nasiriyah, southern Iraq, a US Air Force source told AFP.

Iraqi Foreign Minister Naji Sabri reiterated that some 5,000 Arab volunteers were ready to commit suicide attacks against coalition troops, emulating an Iraqi who killed four US soldiers in a car bomb attack near Najaf in central Iraq on Saturday.

But US General Vincent Brooks dismissed the threats, telling reporters at the US Central Command's forward base in Qatar: "It's not a very effective military tactic at all. It's a terror tactic and it won't be effective."

Despite the increase in fighting on several fronts, Britain acknowledged that coalition forces had not captured any top leaders or uncovered any of the weapons of mass destruction that Washington and London have accused Saddam of harboring.

British Defence Secretary Geoff Hoon said the coalition was holding 8,000 Iraqi prisoners of war. Red Cross workers on Monday began visiting prisoners in a camp in southern Iraq, where ICRC officials said some 3,000 have been taken.

Elsewhere, Syria and Iran hit back at US allegations that they were backing terrorist groups, with Tehran attributing the comments to setbacks for the coalition on the battlefield.

US Secretary of State Colin Powell is to travel Tuesday to Ankara and then on to Brussels to discuss the war in Iraq with Turkish and NATO officials, with the trip to Turkey focused on ironing out lingering differences over the deployment of US soldiers there.

Bush, meanwhile, said the military campaign to disarm and topple Saddam had not blunted the war on terrorism he declared after the September 11, 2001 attacks, but warned that the new US-led offensive may draw retaliatory strikes.

"The dying regime in Iraq may try to bring terror to our shores. Other parts of the global terror network may view this as a moment to strike, thinking that we're distracted. They're wrong," he declared.

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SPACE.WIRE