Implementing provisions of an agreement reached last week, Secretary of State Colin Powell has agreed to allow Turkish "observers" into the oil-rich city of Kirkuk in Northern Iraq to ensure that the Kurdish fighters there don't attempt to exert control over the city.

The deal, reached Thursday with Turkish Foreign Minister Abdullah Gul, makes sure no Turkish military forces enter the region, averting a potential conflagration between Turkish and Kurdish forces and relieving U.S. military forces from double duty as they work toward toppling Saddam Hussein's regime.

Kurdish fighters, or peshmergas, entered Kirkuk on Thursday with little resistance from Iraqi troops. They proceeded to tear down a statue of Saddam situated in Arafat Square and spray-painted the base of the statue with the letters "U.S.A."

Kirkuk is the No. 2 oil-producing center of Iraq and is coveted by Kurds seeking autonomy in the northern region. The north's other major city — Mosul — remains for now under regime control.

Turkey is particularly sensitive to Kurdish authority in the area as it fears an attempt by its nation's 15 million-strong Kurdish minority to annex land and secede from Turkey. Turkey is also concerned about a mass exodus of Kurdish refugees entering its southeast border as happened after the 1991 Persian Gulf War.

Powell said he assured the Turks that Kurdish forces, who have been working alongside U.S. military troops to secure the northern areas of Iraq, will be pulled back from Kirkuk. However, State Department officials clarified that the secretary did not agree to "kick the peshmergas out of Kirkuk" as Gul had been quoted as saying.

Asked at the White House if the United States was going to remove the Kurdish fighters from the city, White House Press Secretary Ari Fleischer said, "U.S. forces will be in control of Kirkuk."

Sensitive to the concerns of Turkey and the fears that a Turkish troop border crossing would complicate efforts to take control of the region, Powell went to Turkey last week to discuss an accord with leaders there that would prevent such an event.

Powell and Gul agreed that Turkish troops would not cross the border into Iraq without U.S. acquiescence. In exchange, the United States promised to prevent circumstances that would prompt Turkey's wanting to go onto the area. The two sides also agreed to an "early warning mechanism" within a trilateral committee of Turks, Kurds and Americans, that would monitor the conditions on the border to pre-empt any discord.

On Wednesday, Powell agreed that Turkey could send a small group of monitors to Kirkuk. He described the group as a small "military liaison."

Fleischer confirmed Thursday that the Turkish government will send "military observers" to the region, but also maintained that the agreement forged between Gul and Powell was being kept.

"Nothing has changed about the overall commitment of Turkey not to cross the border," Fleischer said, adding that there is a "qualitative and quantitative difference" between observers entering the area and a "military incursion."

Fleischer said he did not know how many observers were involved in the mission or what they might do.

"They will observe what is observable," he said.

Turkey has had several thousand troops in northern Iraq for the past few years fighting Turkish Kurdish rebels who have bases in northern Iraq not far from the Turkish border.

Fox News' James Rosen and Teri Schultz and The Associated Press contributed to this report.