The U.S. troops were members of the 101st Airborne Division, said Maj. Mike Escudie of U.S. Central Command in Tampa, Florida. He had no immediate further details.
Gunfire broke out again Friday morning in the same area in the city, where Thursday night's encounter may have signaled a new U.S. determination to disarm religious-based militias and enforce curfews.
An armored personnel carrier of the U.S.-led coalition appeared to be firing Friday morning as screaming men, women and children fled for cover. Shiite gunmen defiantly shouted, "Allahu Akbar!" ("God is great!").
The gunfire soon ended, but young Shiites still manned rooftop and street positions with assault rifles and rocket-propelled grenades.
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Malik Kazim, a gunman who said he was involved in late Thursday's fighting, said it involved an apparent joint American-Polish patrol of armored vehicles and Humvees that passed at about 11:45 p.m. by the offices of a local senior Shiite Muslim cleric, Mahmoud al-Hassani, which were guarded by at least 20 gunmen.
Since Karbala has been under a 9 p.m. curfew since Tuesday, the international patrol ordered the gunmen inside the offices, they refused and a gunbattle ensued, Kazim said.
Iraqi policemen who were at the scene said one fellow officer was killed in the firefight, and Kazim said seven of his comrades were killed. In Warsaw, a Polish Defense Ministry source, speaking on condition of anonymity, said no Poles were hurt.
Kazim said intense gunfire lasted about a half-hour. Dozens of bullet holes, some large-caliber, could be seen in walls in the area Friday morning.
Al-Hassani is one of Karbala's lesser-known ayatollahs - the highest clerical rank in Shiism. Rivalries among Shiite factions have led to sporadic violence in recent weeks, as the sect, suppressed under the now-deposed President Saddan Hussein, flexes its new political muscle as a majority in Iraq.
Thursday night's clash appeared to reflect a determination by the U.S.-led coalition to minimize any challenge to its authority from armed religious militants.
"There are laws governing carrying of weapons in Iraq, and coalition forces will do what they need to do to enforce the law," spokesman Lt. Col. George Krivo said last week.
Polish forces lead an international brigade responsible for postwar security in the Karbala area, 50 miles south of Baghdad, commanding some 9,500 peacekeepers from 21 nations, including 2,400 Poles. The 31,000-square-mile area was handed over by American forces last month.
In New York Thursday, after weeks of wrangling, the 15-member U.N. Security Council unanimously adopted a resolution aimed at attracting more troops and money to stabilize Iraq and put it on the road to independence.
The vote was an important diplomatic victory for President Bush, giving him new credibility as he seeks support for the occupation and reconstruction of Iraq.
Mr. Bush, speaking in San Bernardino, Calif., thanked the Security Council "for unanimously passing a resolution supporting our efforts to build a peaceful and free Iraq."
Secretary of State Colin Powell called the vote "a great achievement."
The U.S. won the support of war opponents France, Germany, Russia and Syria after circulating five drafts of the proposal. All four countries made their support known only hours before the vote Thursday morning.
Washington also won backing from China and Pakistan, and finally - and most surprisingly - from Syria, the only Arab nation on the Security Council and a staunch opponent of the U.S.-led war.
U.N. Secretary-General Kofi Annan said the vote showed the commitment of the Security Council "to place the interests of the Iraqi people above all other considerations.
Another vote Thursday did not go as well as the Bush administration had hoped.
The Senate defied President Bush and voted to convert half his $20.3 billion Iraqi rebuilding plan into a loan, dealing the White House an embarrassing foreign policy setback.
Despite an administration lobbying campaign that in recent days involved Bush himself, Vice President Dick Cheney and other top officials, the Republican-run chamber voted 51-47 for a bipartisan proposal making $10 billion of the aid a loan.
The administration argued that loans would worsen Iraq's foreign debt, slow its recovery and hand a propaganda victory to America's enemies. But the vote underscored that with presidential and congressional elections 13 months away, many lawmakers were more worried about vast new spending for foreign aid at a time of record federal deficits at home.
"It's very hard for me to go home and explain that we have to give $20 billion to a country sitting on $1 trillion worth of oil," said one loan supporter, Sen. Lindsey Graham, R-S.C.
The vote came as the House and Senate edged toward approval of similar $87 billion measures to finance American military operations in Iraq and Afghanistan, as well as the reconstruction of both countries. The lion's share of both bills is about $66 billion for U.S. military operations in Iraq and Afghanistan, funds over which there was little controversy.