L. Paul Bremer, the top U.S. administrator in Iraq, declared an "outlaw" who threatens Iraq's security.
"Effectively he is attempting to establish his authority in the place of the legitimate authority. We will not tolerate this. We will reassert the law and order which the Iraqi people expect," Bremer said.
In Washington, President Bush said he is committed to the June 30 deadline for transferring power in Iraq and will not be deterred by violence and an armed Shiite revolt against the U.S.-led occupation.
"The deadline remains firm," Mr. Bush told reporters.
Meanwhile, U.S. troops sealed off the town of Fallujah, and gunfire and explosions were heard in the city center as operation "Vigilant Resolve" began. Hundreds of U.S. and Iraqi troops in tanks, trucks and other vehicles have surrounded the turbulent city following the grisly slayings of four American security contractors last week.
In other developments:
The chairman of the Senate Foreign Relations Committee, Sen. Dick Lugar, raised the prospect Sunday of extending the Bush administration's June 30 deadline for turning over power in Iraq, questioning whether the country would be ready for self-rule.
But Mr. Bush said the United States would not be deterred from meeting the deadline.
"The intention is to make sure the deadline remains the same," Mr. Bush said.
The president also criticized al-Sadr.
"This is one person that is deciding that rather than allowing democracy to flourish, he's going to exercise force," Mr. Bush said. "We just can't let it stand."
"This is a person and followers who are trying to say we don't want democracy, as a matter of fact, we'll decide the course of democracy by the use of force, and that is the opposite of democracy," Mr. Bush said.
Sunday's riots — which wounded hundreds in Baghdad, Najaf, Nasiriyah and Amarah — were ignited by the arrest of an aide to al-Sadr on charges of killing a rival cleric.
Al-Sadr issued a statement later Sunday calling off street protests, but he also called on followers to "do what you see fit in your provinces. Strike terror in the heart of your enemy … We can no longer be silent in the face of their abuses."
Al-Sadr has demanded an immediate U.S. withdrawal from Iraq, and his followers have protested against U.S.-backed local officials in several towns in the south in previous months.
In Fallujah, U.S. troops closed off entrances to the city with earth barricades ahead of the planned operation. Military patrols entered the outer suburbs on reconnaissance missions and to broadcast warnings on loud speakers to residents to stay indoors until Tuesday.
Iraqi police in the city visited mosques, dropping off Arabic leaflets from the U.S. military, telling residents that there was a daily 7 p.m. to 6 a.m. curfew. It ordered them not to congregate in groups or carry weapons, even if licensed. It instructed people that if U.S. forces enter their homes, they should gather in one room and if they want to talk to the troops to have their hands up.
Some 1,200 U.S. Marines and two battalions of Iraqi security forces were poised to enter the city to arrest suspected insurgents, said Lt. James Vanzant, 2nd Battalion, 1st Marine Expeditionary Force. He would not say when the troops would enter the city.
"The city is surrounded," Vanzant said. "It's an extended operation. We want to make a very precise approach to this. … We are looking for the bad guys in town."
U.S. commanders have been vowing a massive response to pacify Fallujah, one of the most violent cities in the Sunni Triangle, the heartland of the anti-U.S. insurgency north and west of Baghdad.
After the slayings of the Americans on Wednesday, residents dragged the four bodies through the streets, hanging two of their charred corpses from a bridge, in horrifying scenes that showed the depth of anti-U.S. sentiment in the city.
Marine 1st Lt. Eric Knapp said the troops will target the killers of the four Americans as well as rebels who have attacked U.S. forces and Iraqi police in the past month. "Those people are specially targeted to be captured or killed," he said.
A Marine officer, speaking on condition of anonymity, said U.S. forces had a list of targets for raids. He would not give details.
A witness reported that a U.S. helicopter struck a residential area in the city early Monday, killing five people. The bombing damaged five houses, said the witness, Mohammed Shawkat. There was no immediate U.S. comment on the report.
Another witness, resident Ali Jasim, said there was shooting near one of the U.S. barricades on a road out of Fallujah and some Iraqis who were trying to leave the city were hit. It was unclear whether they were killed or wounded. Roads to a hospital in Fallujah were blocked to all traffic except ambulances.