U.S. Marines waged a bloody firefight with Iraqi forces Tuesday around the town of Diwaniyah, 75 miles southeast of Baghdad, as coalition troops continued their push toward the Iraqi capital and reinforcement troops arrived in the Persian Gulf.

The fierce fighting left about 90 Iraqis dead and another 44 taken prisoner, according to field reports.

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Saddam Hussein, in a statement broadcast in the evening on Iraqi television, encouraged his people to take up arms against the advancing coalition forces.

"Kill them, fight them. They are aggressors -- evil aggressors. They are condemned by God," the statement said.

The fact that the statement was delivered by a spokesman, and not by Saddam, fueled further speculation that the Iraqi dictator was wounded or killed in the first airstrike on Baghdad 13 days ago.

At the Pentagon, Defense Secretary Donald Rumsfeld dismissed rumors that coalition forces were negotiating with the Iraqi regime and that a cease-fire was possible.

"The regime is not telling the truth. There are no negotiations taking place with anyone in ... Saddam Hussein's regime," Rumsfeld said.

"There will be no outcome to this war that leaves Saddam Hussein and his regime in power. Let there be no doubt -- his time will end, and soon. The only thing that the coalition will discuss with this regime is their unconditional surrender."

Gen. Richard Myers, chairman of the Joint Chiefs of Staff, said serious combat is already under way against Iraqi forces, and there will be "bigger pushes that will be under way as soon as we're ready." But he gave no indication of the timing of an assault on Baghdad.

Rumsfeld said U.S. and British forces are positioned around the Iraqi capital from the north, south and west. "The circle is closing," he said.

Rumsfeld added that Saddam's Republican Guard troops around Baghdad and Tikrit have suffered from "devastating air attacks."

"The Republican Guard has been taking a pounding for some days now," he said.

Allies Uncover Ammunition Dump

In Diwaniyah, local residents told coalition translators where to find the Baath Party headquarters and the military headquarters from which rocket-propelled grenades had been fired.

Coalition forces also found a large ammunition dump Monday that included 41 buildings and about 6,000 mines and a whole building of rocket-propelled grenades and ammunition.

Fox News' Rick Leventhal, embedded with Marines about 75 miles south of Baghdad, reported that U.S. troops plan to destroy two Iraqi Al-Samoud 2 missiles found on a flatbed truck.

The Al-Samouds are surface-to-surface missiles capable of carrying chemical munitions, although no chemical weapons were found. Iraq, under orders from U.N. weapons inspectors, was slowly destroying its Al-Samouds before the war began.

To the south, British forces said the Iraqis were warming to their presence in towns firmly under their control.

Lights flickered on in Umm Qasr, and schools and shops were reopening. Civilians have started to inform foreign troops about the whereabouts of paramilitary forces and Baath Party members.

"Within the southern area of Iraq, we see a large degree of normality starting to appear amongst the Iraqi population," said Group Capt. Al Lockwood, a spokesman for British forces in the Gulf.

Speaking of other Iraqis' obedience to Saddam, Rumsfeld said: "Their obedience is based on fear and that fear is slipping away as coalition forces advance."

U.S. troops in the desert watched B-52s circle and drop bombs near Karbala Tuesday afternoon. Six cruise missiles were seen heading toward Baghdad and Karbala.

"It's nice to look up and know that everything up there is friendly," said 1st Lt. Eric Hooper of Albany, Ga. "It makes you feel a little better about rolling up that way."

Early missile strikes against Republican Guard positions rocked Baghdad and the holy Shiite Muslim city of Karbala. U.S. troops and tanks encountered rocket-propelled grenades and small arms fire in a dawn raid against Republican Guard defenders of Hindiyah. And other units fought to isolate Najaf to the south and prevent attacks on U.S. supply lines.

In the War Zone

As allied troops continued to close in on Baghdad, more U.S. forces were arriving in the Persian Gulf.

So far, some 5,000 members of the Army's Fourth Infantry Division have arrived in the Gulf, and that figure rises each day. These soldiers were supposed to go to Turkey to form a northern front in Iraq, but Turkey refused permission.

The first of about 17,000 soldiers began flying out of their base in Fort Hood, Texas, last week, and now they are picking up their equipment in Kuwait. The first of about three dozen ships arrived over the weekend, and 30 more are expected to get there by mid-month.

Brig. Gen. Stephen Speakes said the troops could be on the battlefield "in a matter of weeks."

The 2,300-member 24th Marine Expeditionary Unit, based at Camp Lejeune, N.C., landed at Camp Patriot in Kuwait and is preparing to go north.

Also heading to the Persian Gulf are members of the Army's Second Armored Cavalry Regiment. Some 500 already flew into the region over the weekend. The rest are going by sea.

Troops already in battle are forging ahead toward Baghdad.

Marine ground forces have secured an airbase at Qalat Sukkar, southeast of Kut, that is expected to serve as a staging ground. There was heavy bombing of Kut.

Coalition forces have flown 18,000 sorties and cut back the Republican Guard by 50 percent.

Near Basra, warplanes from the USS Kitty Hawk dropped bombs on an Iraqi presidential yacht and another ship.

British forces there destroyed Iraqi tanks and personnel carriers and rescued two Kenyan truck drivers who had been held by Iraqis.

The coalition lost an S-3B Viking plane when it veered off the flight deck of the USS Constellation and slipped into the Persian Gulf. Both pilots aboard were rescued.

In Biyare, in northern Iraq, an assault on a compound controlled by the Islamic militant group Ansar al-Islam turned up lists of names of suspected militants living in the United States.

Coalition troops found computer discs and other materials belonging to Arab fighters from around the Middle East. The Bush administration says the Iraqi-based group is connected to Al Qaeda.

Defense officials say the Republican Guard is weakening in the north and south.

Human Shields

Iraqi Information Minister Mohammed Saeed Sahhaf claimed Tuesday that a coalition bombing attack near the Jordanian border targeted two buses carrying "human shields," including Americans and Europeans. The report couldn't be independently confirmed.

Many coalition troops report Iraqi forces are using women and children as human shields.

Iraqi television aired footage of Saddam and his sons Odai and Qusai, but there was no way of determining when the video was shot.

"There is a lack of concrete information about whether he is dead or alive," a senior administration official told Fox News.

The Associated Press contributed to this report.