Prime Minister Nouri al-Maliki acknowledged he may have miscalculated by failing to foresee the strong backlash that his offensive, which began Tuesday, provoked in areas of Baghdad and other cities where Shiite militias wield power.
Government television said the round-the-clock curfew imposed two days ago on the capital and due to expire Sunday would be extended indefinitely. Gunfire and explosions were heard late Saturday in Sadr City, the Baghdad stronghold of al-Sadr's Mahdi Army militia.
The U.S. Embassy tightened its security measures, ordering all staff to use armored vehicles for all travel in the Green Zone and to sleep in reinforced buildings until further notice after six days of rocket and mortar attacks which left two Americans dead.
Despite the mounting crisis, al-Maliki, himself a Shiite, vowed to remain in Basra until government forces wrest control from militias, including the Mahdi Army. He called the fight for control of Basra "a decisive and final battle."
British ground troops, who controlled the city until handing it over to the Iraqis last December, also joined the battle for Basra, firing artillery Saturday for the first time in support of Iraqi forces.
Iraqi authorities have given Basra extremists until April 8 to surrender heavy and medium weapons after an initial 72-hour ultimatum to hand them over was widely ignored.
But a defiant al-Sadr called on his followers Saturday to ignore the order, saying that his Mahdi Army would turn in its weapons only to a government that can "get the occupier out of Iraq," referring to the Americans.
The order was made public by Haidar al-Jabiri, a member of the influential political commission of the Sadrist movement.
Al-Sadr, in an interview aired Saturday by Al-Jazeera television, said his Mahdi Army was capable of "liberating Iraq" and maintained al-Maliki's government was as "distant" from the people as Saddam Hussein's.
Residents of Basra contacted by telephone said Mahdi militiamen were manning checkpoints Saturday in their neighborhood strongholds. The sound of intermittent mortar and machine gun fire rang out across the city, as the military headquarters at a downtown hotel came under repeated fire.
An Iraqi army battalion commander and two of his bodyguards were killed Saturday night by a roadside bomb in central Basra, military spokesman Col. Karim al-Zaidi said.
The fight for Basra is crucial for al-Maliki, who flew to Basra earlier this week and is staking his credibility on gaining control of Iraq's second-largest city, which has essentially been held by armed groups for nearly three years.
In a speech Saturday to tribal leaders in Basra, al-Maliki promised to "stand up to these gangs" not only in the south but throughout Iraq.
Iraqi officials and their American partners have long insisted that the crackdown was not directed at al-Sadr's movement but against criminals and renegade factions - some of whom are allegedly tied to Iran.
Al-Maliki told tribal leaders that the offensive in Basra "was only to deal with these gangs" - some of which he said "are worse than al Qaeda."
Without mentioning the Sadrists by name, al-Maliki said he was "surprised to see that party emerge with all the weapons available to it and strike at everything - institutions, people, departments, police stations and the army."
Al-Sadr's followers have accused rival Shiite parties in the national government of trying to crush their movement before provincial elections this fall. The young cleric's lieutenants had warned repeatedly that any move to dislodge them from Basra would provoke bloodshed.
But al-Maliki's comments appeared to reinforce suspicions that his government failed to foresee the backlash, including a sharp upsurge in violence throughout the Shiite south and shelling of the U.S.-controlled Green Zone, the nerve center of the Iraqi leadership and the U.S. mission.
Two American soldiers were killed Saturday when their vehicle was struck by a roadside bomb in mostly Shiite east Baghdad, the U.S. military said.
The upsurge in violence prompted Iraqi authorities to impose a round-the-clock curfew on the capital, which expires at sunrise Sunday.
All that threatens to undermine White House efforts to convince a skeptical Congress and the American public that the Iraqis are making progress toward managing their own security without the presence of U.S. troops.
With the Shiite militiamen defiant, a group of police in the Mahdi Army's Baghdad stronghold of Sadr City abandoned their posts and handed over their weapons to al-Sadr's local office. Police forces in Baghdad are believed heavily influenced or infiltrated by Mahdi militiamen.
"We can't fight our brothers in the Mahdi Army, so we came here to submit our weapons," one policeman said on condition of anonymity for security reasons.
He said about 40 policemen had defected to the Mahdi Army. The figure could not be confirmed, but AP Television News footage showed about a dozen uniformed police, their faces covered with masks to shield their identity, being met by Sheik Salman al-Feraiji, al-Sadr's chief representative in Sadr City.
On Saturday, Iraqi officials said they had received a phone call from Tahseen Sheikhly, the high-profile civilian spokesman for the Baghdad security operation, who was seized by gunmen two days earlier from at his home in a Shiite area of the capital.
An Iraqi-owned satellite television station, Sharqiya, broadcast what it said was a tape of the conversation, in which a man identifying himself as Sheikhly said he was being held "with a group of officers" at an unknown location.
"Our release depends on the withdrawal of al-Maliki from Basra and the easing of the military operations against the Sadrists in all provinces," he said. "We appeal to the prime minister and the Iraqi government to work with the Sadrist movement, which represents the popular base of society."
The U.S. military says 16 enemy fighters have been killed in airstrikes supporting Iraqi troops during clashes with Shiite militiamen in Basra.
Military spokesman Maj. Brad Leighton says an AC-130 gunship strafed heavily armed militants attacking Iraqi forces from three rooftops in the southern city.
Iraqi police earlier claimed eight civilians, including two women and a child, had been killed when a U.S. warplane destroyed a house early Saturday.
But Leighton says U.S. special operations forces helped identify the militants before the airstrike.
British military spokesman Maj. Tom Holloway also says U.S. jets later dropped two precision-guided bombs on a suspected militia stronghold north of the city, but no casualties were reported.
"My understanding was that this was a building that had people who were shooting back at Iraqi ground forces," Holloway said.
American forces launched their first air strikes in Basra late Thursday as Iraqi troops struggled against strong resistance.
In Baghdad, Iraqi police said U.S. helicopters carried out air strikes on the Shiite neighborhood of Sadr City Friday night. Television footage showed destroyed buildings and the smoking wreckage of at least one car.
But the U.S. military said in an e-mail that the only air assault it carried out last night was in the Kazamiyah neighborhood, west of Sadr City, killing 10 militants.
Iraq's Health Ministry, which is close to the Sadrist movement, on Saturday reported at least 75 civilians have been killed and at least 500 others injured in a week of clashes and air strikes in Sadr City and other eastern Baghdad neighborhoods.
The U.S. military sharply disputes the claims, having said that most of those killed were militia members.