U.S forces dropped two tons of bombs on a purported militant safehouse in Fallujah (search), killing at least 10 people, according to officials, and turning the building into a 30-foot-deep pit of sand and rubble.

The attack was the fifth airstrike in the past two weeks in the area where the U.S. military says Jordanian militant Abu Musab al-Zarqawi's (search) network has safehouses.

Iraqi Prime Minister Iyad Allawi (search) issued an unprecedented statement saying his government provided intelligence to the U.S. military for the strike.

The interim government has been trying to figure out how to deal with the insurgents, and the air strike came just hours after it postponed an announcement of new security laws to deal with them.

Also Monday, an Iraqi militant group denied reports it had killed a U.S. Marine it was holding captive. In a statement sent to Al-Jazeera television, the group calling itself "Islamic Response," said Cpl. Wassef Ali Hassoun (search), a U.S. Marine of Lebanese heritage, was safe at a location it did not identify.

On Saturday, a Web site posting claimed Hassoun had been beheaded. On Sunday, a second Web posting on another Internet site said Hassoun was alive.

Meanwhile, Iraq's vital oil exports were cut nearly in half as workers struggled Monday to repair a key pipeline shut down after looters broke into it, officials with the South Oil Company and traders said Monday.

In Fallujah, 30 miles west of Baghdad, rescue workers picked up body parts after the U.S. airstrike, witnesses said. Video from Associated Press Television News showed the explosion flung bricks blocks away, and blood was splashed on a nearby wall.

Men gathered at the 30-foot-deep pit where the house had been and pulled out clothes, including a young child's shirt, from the rubble.

"Is this acceptable to the Iraqi government?" asked an angry man at the scene, who declined to identify himself. "Where are human rights?"

Dr. Diaa Jumaili of Fallujah Hospital said 10 bodies had arrived there, most of them dismembered. Previous U.S. air strikes in Fallujah have killed dozens.

The military said it had dropped four 500-pound bombs and two 1,000-pound bombs. The attack used guided weapons and underscored the resolve of coalition and Iraqi forces "to jointly destroy terrorist networks within Iraq," the military said.

Al-Zarqawi, said to be connected to Al Qaeda (search), is believed to be behind a series of coordinated attacks on police and security forces that killed 100 people only days before U.S. forces handed over power to an Iraqi interim government.

The attacks have led to fears that religious fanatics and Saddam Hussein loyalists may be joining forces to fight both the multinational force and the new Iraqi government.

Allawi has promised tough measures against the insurgents, who have been creating chaos here since the fall of Saddam's regime 14 months ago.

The announced cooperation with the air strike appeared to be a first step toward that.

In a statement soon after the attack, Allawi said Iraqi forces provided the intelligence for the location of the al-Zarqawi safehouse so the strike could "terminate those terrorists, whose booby-trapped cars and explosive belts have harvested the souls of innocent Iraqis without discrimination, destroying Iraqi schools, hospitals and police stations."

Allawi appealed to all Iraqis to report the activities of insurgents.

"The sovereign Iraqi people and our international partners are adamant that we will put an end to terrorism and chase those corrupt terrorists and will uproot them one by one," he said in the statement.

Earlier in the day, Iraqi officials canceled a news conference Monday where they had been expected to announce a limited amnesty for insurgents and martial law in parts of the country.

The news conference with Justice Minister Malik Dohan al-Hassan and Human Rights Minister Bakhtiyar Amin was postponed indefinitely just as it was scheduled to begin. The government had canceled a previous news conference on the same topic, suggesting disagreement within the government over the measures.

Allawi also said Monday he wouldn't interfere with an Iraqi tribunal's right to decide whether Saddam and his top lieutenants should be executed on war crimes charges.

In an interview with the Arab language television station Al-Arabiya, Allawi said he was willing to abide by whatever the court decided in the trial, which is not expected to begin for months. Iraq assumed legal custody of Saddam from the United States last week and re-instituted the death penalty, which had been suspended by U.S. occupation authorities.

"As for the execution, that is for the court to decide -- so long as a decision is reached impartially and fairly," he said.

The broadly outlined charges against Saddam include the slaughter of Shiites during a 1991 uprising and a chemical weapons attack against Kurds in the northern city of Halabja.

Thousands of Kurds demonstrated Monday in Halabja, demanding that Saddam and one of his key lieutenants -- Ali Hassan al-Majid (search), also known as "Chemical Ali" -- be put to death for the attack that killed 5,000 people on March 16, 1988.

"Every family in this city lost no less than five of its dear sons," said one demonstrator, Sabiha Ali, 50.

In southern Iraq, insurgents fired rockets at a government building early Monday, but instead struck nearby homes, killing one person and wounding eight others, police said. The attack targeted the province's main offices near the center of the Basra.

Interior Ministry officials also announced Monday the capture of two Iranians suspected of trying to detonate a car bomb. Iraqi officials have blamed foreign fighters and religious extremists for a wave of vehicle bombings in recent months.

Also Monday, authorities in the town of Sulaiminyah in the Kurdish north of Iraq fired at a car rigged with explosives outside a hotel that housed diplomats, killing the driver, Kurdish official Dana Abdul Majid said.

Although Iraq regained sovereignty last Monday, about 160,000 foreign troops, most of them Americans, remain here under a U.N. resolution to help the new government restore security.