The announcement came as heavy fighting persisted in Najaf's Old City, the center of much of the past three weeks of clashes. U.S. warplanes fired on the neighborhood, helicopters flew overhead and heavy gunfire was heard in the streets, witnesses said.
Iraqi police sealed off the Old City, preventing cars from entering.
Grand Ayatollah Ali Husseini al-Sistani, 73, has been in London for medical treatment since Aug. 6, one day after clashes erupted in Najaf. The cleric wields enormous influence among Shiite Iraqis and his return could play a crucial role in stabilizing the crisis.
Al-Sistani crossed into southern Iraq from Kuwait about midday in a caravan of sport utility vehicles accompanied by Iraqi police and national guardsmen, according to an Associated Press reporter with the convoy. The convoy stopped in the southern city of Basra.
Al-Sistani was headed to Najaf "to stop the bloodshed," said Al-Sayyid Murtadha Al-Kashmiri, an al-Sistani representative in London. The cleric will arrive in the violence-wracked city Thursday and "those believers who wish to join him, let them join," he said.
There are already reports of Shiites piling on buses in Baghdad to head to Najaf, reports CBS News Correspondent Elaine Cobbe.
In other developments:
In recent days, U.S. and Iraqi forces in Najaf tightened a cordon around the Old City and the neighboring Imam Ali Shrine, the holiest Shia site in Iraq. U.S. forces shelled militants loyal to rebel Shiite cleric Muqtada al-Sadr in the Old City on Wednesday and smoke rose into the sky after U.S. warplanes pummeled the area overnight.
The relentless American bombing in Najaf appeared to be weakening the militants. Iraqi troops moved to within 200 yards of the revered Imam Ali Shrine and Iraq's defense minister once again demanded fighters loyal to al-Sadr surrender or face a violent raid.
The militant force, which once waged fierce battles with U.S. troops throughout the Old City and Najaf's vast cemetery, seemed considerably diminished in number and less aggressive Tuesday after days of U.S. airstrikes and heavy artillery pounding.
Hundreds of insurgents have been spotted leaving Najaf in recent days, witnesses said. Those that remained appeared to have pulled back to the area around the shrine, where the fighting Tuesday was concentrated, U.S. troops said.
Police say al-Sadr, who has not been seen in public for days, has fled the city.
His aides, however, vigorously denied that, saying al-Sadr was in a secret hideout here. Regardless, the fiery, charismatic cleric's absence from the battlefield may have withered his followers' morale.
Hamed al-Khafaf, an al-Sistani aide, told the Arab satellite television station Al-Arabiya that al-Sistani "will lead thousands of followers on a march to holy Najaf."
"We call upon all devout Iraqis who follow him" from all over the country to be "on alert to head to holy Najaf under his leadership," al-Khafaf told the station. He said an announcement on the next steps will be made later.
Abdel Hadi al-Daraji, an al-Sadr spokesman in Baghdad, also called all Muslims to march on Najaf.
"I call on all my Sunni brothers and also our brothers in all of Iraq's provinces to immediately head to Najaf and to protect the shrine," told Al-Arabiya television.
On Tuesday, fierce fighting broke out near the shrine compound in Najaf, with rockets launched from U.S. helicopters kicking up clouds of smoke and debris. Bradley fighting vehicles patrolling the nearly deserted, bullet-scarred streets attacked militants, who responded with mortar fire and rocket-propelled grenades.
Iraqi forces, accompanying U.S. troops into the Old City for the first time in recent days, combed through the neighborhood, approaching as close as 200 yards to the shrine, controlled by militants loyal to al-Sadr.
Iraqi officials have said that any raid on the shrine would be conducted by Iraqi forces, since the presence of U.S. troops at the holy site would future inflame Shiites here. Both the Iraqi government and the U.S. military say no military moves are being made without the approval of interim Prime Minister Ayad Allawi.
Any raid on the shrine, the holiest Shiite site in the country, risked igniting a massive Shiite rebellion throughout Iraq.
Some al-Sadr lieutenants reiterated their appeal for talks, a request the government has repeatedly rejected.
Defense Minister Hazem Shaalan, addressing Iraqi National Guard troops in Najaf, said Tuesday that Iraqi forces would head toward the shrine "tonight" to await the signal for a raid or the capitulation of the militants.
"They have hours to surrender," Shaalan said. But by Wednesday, there was no indication Iraqi forces had advanced on the shrine. Shaalan made a similar threat a week ago. The government later backed down and said it would work for a peaceful solution.