Radical cleric Muqtada al-Sadr (search) will end his violent standoff with American troops if the U.S.-led coalition postpones its legal case against him and sets up an Iraqi force to patrol his stronghold of Najaf (search), Iraqi leaders in the city said Tuesday.

About 40 Iraqi political and tribal leaders, including a senior aide to al-Sadr, agreed on the proposal at a meeting at the most prominent shrine in the holy Shiite city, where American forces have fought the cleric's fighters this month. The violence comes as U.S. forces try to improve security ahead of a June 30 deadline for the restoration of sovereignty to Iraqis.

There was no immediate response from the coalition to the offer from Najaf, but the new U.S.-appointed governor of the city offered earlier in the day to defer murder charges against al-Sadr if the young firebrand disbands his militia.

Mansour al-Assadi, a senior tribal leader, said a proposed deal would require all armed groups in Najaf to withdraw from the city, a step that would defuse rising tension among rival Iraqi groups. In exchange, murder charges against al-Sadr would be postponed until a permanent constitution is adopted next year, and would be tried by an Islamic court.

Qays al-Khaz'ali, a senior aide to al-Sadr, attended the meeting and confirmed that participants agreed on an offer to end the standoff.

Adnan al-Zurufi, who was appointed Najaf governor last week, said he will ask the U.S.-led administration to delay legal proceedings against al-Sadr until after the Americans transfer power to a new Iraqi administration June 30.

"The legal process will be delayed until after the transfer of power on condition the militias are disbanded and surrender their weapons," al-Zurufi told The Associated Press. "The local police will take over the security of the province."

Maj. Gen. Martin Dempsey, commander of U.S. forces in the Najaf area, said he had been urging religious, political and tribal leaders to seek a political solution.

Al-Sadr has been holed up in Najaf since early April after U.S. authorities announced an arrest warrant against him in connection with the April 2003 assassination of a moderate rival cleric in Najaf.

His forces have clashed with U.S., British and other occupation forces across southern Iraq and in Baghdad since then. Five Iraqis were killed and 14 injured during fighting late Monday between U.S. troops and al-Sadr's militia in Najaf's twin city Kufa (search), hospital sources said.

In a statement Tuesday, al-Sadr said he was willing to tell his fighters to end the confrontation "if the occupation forces officially request negotiations, provided that they are just and honorable and under the supervision of religious authorities."

Sadreddin al-Qombanji, the local representatives of Iraq's largest Shiite political party, said he had "received indications" that "all forms of armed presence" would soon be withdrawn from the city. He did not say whether this signaled a deal with the Americans to remove their positions from the edge of Najaf.

Al-Qombanji is a member of the Supreme Council of the Islamic Revolution in Iraq, or SCIRI.

In a statement this month, al-Sadr offered to stop shooting at coalition forces if the Americans withdraw from the Kufa and Najaf areas and suspend legal proceedings until after an elected Iraqi government takes power.

The Iraqi government due to take office June 30 will not be elected but appointed after consultations with U.N. envoy Lakhdar Brahimi, who is in Baghdad for consultations with Iraqi and U.S. officials. Elections are expected by next January.

Also Tuesday, about 1,000 people, including a few women in black veils, marched through the streets of Najaf to urge al-Sadr and his followers to leave the city, as called for by moderate Shiite leaders.