"They pushed forward some troop transporters and tanks, we have surrounded them with our troops," Sahhaf said after US forces reported taking control of three palaces, including the main Republican Palace in the heart of the capital.

"We will massace them, these invaders. Their graves will be here."

AFP reporters said fighting continued at the Republican Palace compound.

Sahhaf even went on to deny the presence of US forces in Baghdad.

"There are no American troops in Baghdad," he said. "They do not even have control of themselves.

"They are sick."

Sahhaf urged the world "not to believe" US claims of having taken key sites in Baghdad and said Iraqi forces had taught them "a lesson that history will never forget".

At an impromptu press conference in the street, Sahhaf said: "Don't believe these invaders and these liars. There are none of their troops in Baghdad."

He added that "our heroic forces have killed hundreds" of American soldiers who entered the Dora and Yarmuk neighbourhoods in the southwest of the capital on Saturday.

In smiling, defiant mood, al-Sahhaf said: "We killed them, we made them drink poison and taught them a lesson that history will never forget.

"Baghdad is full of armed citizens ready to support the forces.

"They (the Americans) are losing. I ask you to verify everything they say and not just to repeat the lies of these liars."

SPACE.WIRE