The Imam Ali Shrine in Najaf was once again a place of worship after a truce ended three weeks of bloody fighting.

Thousands of pilgrims streamed into the mosque Friday as militants who had been holed up inside battling U.S. and Iraqi troops left the compound nearly empty following a peace deal brokered by Iraq's top Shiite cleric in the holy city.

An aide to the Grand Ayatollah Ali Husseini al-Sistani (search) said militants loyal to a rebel Shiite cleric had handed over the keys to the shrine.

"Now the holy shrine compound has been evacuated and its keys have been handed over to the religious authority," al-Sistani aide Hamed al-Khafaf told Al-Arabiya television.

"We're still trying to get additional details about all the terms of the agreement," White House press secretary Scott McClellan said. "We welcome these steps to resolve the situation surrounding the shrine of Ali without further violence and we support the efforts of the Iraqi government to make sure that the rule of law applies throughout the country."

Secretary of State Colin Powell praised the peace deal on FOX News Radio's "Tony Snow Show," saying it demonstrated good cooperation between U.S. and Iraqi forces in confronting radical Shiite cleric Muqtada al-Sadr (search).

Meanwhile, violence appeared to continue elsewhere in Iraq. A U.S. warplane fired on a truck driven by militants in the restive city of Fallujah, a Marine spokesman said. American forces have been using air assaults to take out suspected terrorist hideouts in recent months.

And elsewhere in Najaf, 10 bodies, some possibly belonging to Iraqi police officers, were found in a religious court set up by al-Sadr's followers. Iraqi police said they appeared to belong to victims of the court's summary brand of justice.

The standoff in Najaf began when a militia loyal to al-Sadr commandeered the holy shrine and used it as a headquarters for fighting U.S. and Iraqi forces. American troops would not attack the shrine for fear of enraging Iraq's Shiite majority.

Al-Sadr accepted the peace proposal in a face-to-face meeting Thursday night with the 75-year-old al-Sistani.

Iraq's interim government also accepted the deal, and U.S. forces ordered their troops to cease fire. Police briefly exchanged fire with militants in one part of town Friday, and some U.S. troops were still receiving occasional sniper fire. Nevertheless, most of the city was calm.

There was no immediate word if the U.S. military would accept the provisions on the agreement calling on its forces to leave Najaf, though military leaders have said they were fighting there only at the behest of the government. In Washington, a senior Bush administration official, speaking on condition of anonymity, said only: "We've seen the developments. We're watching them very closely."

Iraq State Minister Qassim Dawoud said U.S. and coalition forces would pull out of Najaf as soon as interim Prime Minister Ayad Allawi ordered it.

The handover of the keys was a symbolic, yet crucial, step in ending the bloody crisis that had plagued the city since Aug. 5, killing hundreds of Iraqis and nine U.S. troops, ravaging parts of the Old City and threatening the control of Iraq's interim government.

Al-Sistani's highly publicized, 11th-hour peace mission would almost certainly boost his already high prestige in Iraq and cloak him in a statesman's mantle, showing that only he could force an accord between two sides that loathe each other.

The influential cleric returned to Iraq after heart treatment in London to intervene for the first time in the bloody conflict, drawing thousands of followers who marched on Najaf and massed on its outskirts.

Al-Sadr issued a statement broadcast over the shrine's loudspeakers early Friday morning, ordering his fighters to lay down their arms and leave Najaf and neighboring Kufa.

"To all my brothers in Mahdi Army (search) ... you should leave Kufa and Najaf without your weapons, along with the peaceful masses," his statement said.

Hours later, thousands of people marched through Najaf to visit the shrine, one of Shia Islam's holiest. Many kissed its doors as they entered, chanting "Thanks to God!"

Militants were seen walking out, chanting "Muqtada, Muqtada."

Police later blocked roads leading to the area, preventing people from entering and searching throngs of people as they streamed out of the shrine. Most of those leaving carried no weapons, but police detained four militants carrying grenades.

Will It Last?

Al-Sadr leads a 3,000-strong militia that has been fighting U.S. and Iraqi forces in Najaf and other cities throughout Iraq. While Thursday's agreement seemed like a real breakthrough, he has flip-flopped on various peace negotiation deals offered to him over the past few months.

The agreement leaves the Mahdi Army intact and al-Sadr free, despite U.S. vows in the past to destroy the militia and arrest its leader, who is accused of murdering a rival cleric. Since the transfer of sovereignty June 28, the Iraqi interim government has said it has no intention of arresting al-Sadr, but wants him to turn his militia into a political party.

Thousands of al-Sadr's militiamen were still believed to be armed in the city, though most were staying off the streets. Many began piling Kalashnikov rifles in front of al-Sadr's offices on Friday. In one narrow alley, some fighters could be seen pushing carts full of machine-guns and rocket launchers.

By Friday afternoon, the shrine, where the fighting had been centered, appeared empty, clear of the visitors and the militants. U.S. forces, however, maintained their positions around the holy site and jet fighters flew overhead.

"We'll be at the ready," Powell said on "Tony Snow." "More importantly, the Iraqi government will be at the ready ... [the Mahdi Army] took huge losses over the last several weeks and I think their capability was diminished and we want to keep that capability diminished."

A Marine spokeswoman, Capt. Carrie C. Batson, said the Americans would remain in the area "until further notice" to "ensure implementation of the terms of the cease-fire," adding that U.S. forces were working at the Iraqi government's request.

Iraqi forces were in control of the Old City. Dozens of Iraqi police and national guardsmen deployed around the compound of the walled, golden-domed shrine in the Old City Friday afternoon — but did not enter. Some kissed the compound's gates, others burst into tears. Some residents of the devastated Old City neighborhood waved to them and yelled out, "Welcome. Welcome."

The five-point plan calls for Najaf and Kufa to be declared weapons-free cities, for all foreign forces to withdraw from Najaf, for police to be in charge of security, for the government to compensate those harmed by the fighting, and for a census to be taken to prepare for elections expected in the country by January.

Violence in Mosul, Baghdad

The Health Ministry said 110 people were killed and 501 were wounded in Najaf and Kufa on Thursday. Twenty-seven of the dead were killed when mortars slammed into Kufa's main mosque, where thousands had gathered to march into Najaf in support of al-Sistani's mission.

In Baghdad, guerrillas attacked a U.S. patrol four times with grenades wounding 12 U.S. soldiers, the Army said. Four suspects were detained on suspicion of involvement in the attacks, the Army said in a statement.

In the northern city of Mosul, a car bomb exploded as a U.S. military convoy moved through a traffic circle on the western edge of the city, wounding 10 Iraqi civilians and a U.S. soldier, said Army Capt. Angela Bowman.

A gunbattle between U.S. forces and militants erupted Friday in central Baghdad's Haifa Street on Friday, according to an Associated Press photographer on the scene. U.S. troops sealed off the area and explosions could be heard as helicopter gunships circled overhead.

Also, a U.S. soldier was killed in a vehicle accident and a second seriously injured near the volatile city of Fallujah, the military said.

Meanwhile, an Arab-language television station said Friday that it received a video showing the killing of kidnapped Italian journalist Enzo Baldoni, whom militants had threatened to execute if Italy did not withdraw troops from Iraq. Al-Jazeera said the video was too graphic to broadcast but appeared to show Baldoni being slain.

Italian Premier Silvio Berlusconi, a staunch supporter of the U.S.-led war to topple Saddam Hussein's regime, condemned the reported slaying and repeated his statement of Tuesday that Italy's 3,000 soldiers would not abandon the U.S.-led coalition and Iraq's government.

The Associated Press contributed to this report.