US Central Command described it as a raid and not an all-out assault on the city, while AFP reporters said heavy fighting was still raging throughout the day as the death toll from the 19-day-old war kept climbing.

Two foreign journalists and two US soldiers were killed in an Iraqi rocket attack on a US position outside Baghdad, which also left 15 US soldiers wounded.

Baghdad witnesses said 14 people died when a bomb hit a residential area.

Huge explosions and the boom of artillery fire echoed across the city and AFP correspondents said Iraqi fighters had closed off an area around the famed Al-Rashid hotel where a furious gunbattle could be heard.

With hospitals in the city struggling to cope with the flood of dead and injured, hundreds of civilians pressed outside the shut gates of the Al-Alawi bus station, searching in vain for a bus out of Baghdad.

The United States said more than 100 tanks and armoured fighting vehicles were used in the daylight raid, which saw US forces muscle into two palaces, including the sprawling Republican Palace compound that has come to symbolise his 24-year grip on power.

Explosions and smoke poured from the sprawling 2.5-square kilometre (one-square mile) palace, which houses Saddam's personal office and an underground bunker designed to withstand nuclear attack.

AFP reporters saw 10 US marines in full combat gear and armoured vehicles inside the palace, which has been pounded repeatedly since the US-led coalition launched the war on March 20.

No Iraqi leaders were reported to have been found in the palaces.

Iraq's Information Minister Mohammed Said al-Sahhaf, who has emerged as the public defiant face of the regime, told reporters that US troops had not even entered the city in any significant strength, a claim shrugged off by a Central Command spokesman in Qatar.

"The war of words is over," Captain Frank Thorp said.

The US-British coalition says the war will not be over until Saddam and his inner circle are ousted from power.

In mid-afternoon, as the fighting was raging, state television showed Saddam meeting with a senior aide though there was no way to know when the footage was shot.

US Brigadier General Vincent Brooks said that much of Baghdad was no longer in Saddam's control, although he did not say if areas had been taken by US troops.

The US-led coalition has been hoping for a popular uprising to help topple Saddam. AFP correspondents said the district around the palace, including the ministries of information and foreign affairs, were still in Iraqi hands.

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 center as well as a third near the airport.

But he said: "We've been significantly challenged."

Brooks at Central Command said coalition forces were still facing "pockets of resistance" across the country.

Warplanes roared low over Baghdad during the afternoon. Iraqi anti-aircraft defenses opened fire despite minimal visibility due to the thick dust and smoke from oil trench fires covering the city.

Fighting intensified later at the palace compound, where at least three Bradley fighting vehicles fired on the buildings on the banks of the Tigris river.

Troops entered one building after setting fire to surrounding bushes, then blew up a nearby building.

Iraqi paramilitary fighters were seen firing assault rifles and rocket-propelled grenades from different angles toward the area of the Al-Rashid hotel, which they sealed off, AFP journalists said.

It was not clear who was returning fire.

From the southeast, US Marines entered Baghdad undeterred by the blowing up of two bridges on the Diyala River, which runs east of the Iraqi capital.

In southern Iraq, British Royal Marine commandos seized Saddam's presidential palace in the second-largest city of Basra as a commander said the battle to take the city was "more or less over".

The arrival of British troops was greeted with scenes of joy by some residents who ripped down murals of Saddam. One told AFP that the downfall of Saddam's control over Basra was the day "we had prayed for".

British Defense Secretary Geoff Hoon said there was strong evidence that Ali Hasan al-Majid, the notorious Iraqi official better known as "Chemical Ali", had been killed in a coalition air strike three days earlier.

"We have some strong indications that he was killed in the raid conducted Friday night but I can't yet absolutely confirm the fact that he is dead. But that would be certainly my best judgement in the situation," he said.

Many Iraqis gave a rousing welcome to US marines as they closed on the last 80 kilometers (50 miles) of their drive towards Baghdad, and there were similar scenes of jubilation in Basra.

Hundreds of men yelled "kill Saddam" as they sliced their thumbs across their throats, an AFP reporter with the marines said.

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SPACE.WIRE