AFP reporters saw 10 US marines in full combat gear inside the Republican Palace on the banks of the Tigris, which has been pounded repeatedly since the US-led coalition launched the war 19 days ago.

Amid heavy exchanges of mortar and rocket-propelled grenade fire, clouds of smoke covered the 2.5 square-kilometre (one square-mile) palace, which houses Saddam's personal office and an underground compound designed to withstand nuclear attack.

US troops claimed to have seized the complex, a symbol of Saddam's power and glory, as well as two other palaces around Baghdad. Two Bradley fighting vehicles and two Abrams tanks were seen at the entrance to the Republican Palace.

Fighting had ceased by late morning.

But Iraq insisted it was still in control, with Information Minister Mohammad Said al-Sahhaf assuring reporters the invaders would be "massacred".

"They pushed forward some troop transporters and tanks, we have surrounded them with our troops," Sahhaf said.

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

Lieutenant Colonel Peter Bayer, operations officer for the US army's 3rd Infantry Division, said US troops had "secured the main presidential palace" and another palace in the city centre as well as a third near the airport.

"There are two palaces (in the city centre), we own both of them," Bayer told reporters.

He said they were captured by the division's Second Brigade which sent two tank battalions and a mechanized infantry battalion, totalling some 65 tanks and 40 Bradley fighting vehicles, into the city.

Heavy explosions had begun booming into the grey skies from around 6:15 am (0215 GMT), apparently from artillery fire to the capital's west -- site of the international airport which was seized by US troops Friday.

There appeared to be a lull in the fighting by 10:00 am (0600 GMT), but the exchanges of fire loudly resumed within 45 minutes only to die out quickly.

An arms depot had also caught fire and fuel trenches inside the Republican Palace compound were ablaze, belching out layers of black smoke.

AFP correspondents said the administrative district around the palace, including the ministries of information and foreign affairs, were still in Iraqi hands Monday morning.

The roads leading up to the presidential palace and key ministries were guarded by nervous-looking militiamen armed with rocket-launchers and Kalashnikov rifles.

Dozens of men in civilian clothing, with ammunition strapped across their chests, stationed themselves behind walls and trees, as ambulance sirens wailed across the city.

As the fighting raged, the streets were deserted except for a few civilians who tried to drive away and militiamen running in all directions, with dozens heading across the al-Rashid bridge over the Tigris river.

Some people stopped cars looking for a ride out or had stacked mattresses and other coverings into their own cars.

Almost all central shops had downed their shutters and the station for buses heading outside Baghdad was completely empty.

US Defence Department spokesman Major Ben Owens said the palace raid "does not represent the battle for Baghdad.

"What this is is a powerful message that we can go where we want, when we want," Owens said in Washington.

Warplanes had flown over Baghdad all night, sometimes at low altitude, without bombing any targets.

US or British forces have repeatedly rained down missiles and bombs on the Republican Palace, which was built in 1982 and is said to be designed to withstand an explosion the power of the atom bomb that fell on Hiroshima in

Karl Bernd Esser, the German architect who says he designed the bunker buried deep beneath the palace complex, recently told Germany's ZDF television that the walls were three metres (10 feet) thick and could withstand temperatures up to 300 degrees Celsius.

Esser said on his company's Internet website that the bunker includes a command centre in its 1,800 sq metres (19,370 sq feet). It cost 66 million dollars to build, but proved its worth in the 1991 Gulf war, withstanding aerial bombardment.

It said the bunker is capable of holding up to 90 people and can withstand a hit by a conventional 250-kilogram bomb or protect the occupants from the effects of a nuclear, chemical or biological attack.

SPACE.WIRE