Shiite (search)militiamen attacked a U.S. convoy in southern Iraq, killing two soldiers and setting vehicles on fire, even as mediators were trying Sunday to find a resolution to the U.S. standoff with the militia's leader. Two other American soldiers were killed in Baghdad.

The convoy attack came Saturday evening outside the city of Amarah, 180 miles south of the capital, when gunmen loyal to radical Shiite cleric Muqtada al-Sadr (search) opened fire with small arms and rocket-propelled grenades, a U.S. military official said.

A number of Humvees and trucks were in flames on the road outside the city hours later, witnesses said.

British forces battled members of al-Sadr's al-Mahdi Army (search) militia for 12 hours in Amarah in fighting that lasted until early Sunday and left five Iraqis dead and eight British soldiers wounded.

The clash began when gunmen attacked a British patrol, wounding one soldier, said a British military spokesman. Five more troops were wounded as a team rescued the first man, said British Royal Air Force Squadron Leader Jonathan Arnold, a military spokesman.

In the evening, the fighting revived when insurgents fired mortar shells and rocket-propelled grenades at the British base in the city, and British soldiers lobbed flares into the night sky to illuminate and fire on the attackers.

Two more British soldiers were wounded. Witnesses said two British trucks were burned in the fighting. An Iraqi civilian working on the base was wounded by shrapnel from an exploding mortar shell, the British military said.

Two more U.S. soldiers were killed before dawn Sunday in an attack in northwest Baghdad that also wounded two Iraqi security officers and another American, the military said, without providing details on the attack.

The deaths raised the U.S. death toll to 144 since a wave of violence began on April 1. At least 746 U.S. troops have died in Iraq since the war began in March 2003. Up to 1,200 Iraqis also have been killed this month.

Meanwhile, Marines who pulled back from enforcing a cordon on the southern Fallujah had returned to their previous duties, patrolling outlying villages, giving way to a newly created Iraqi brigade that the Americans said would root out die-hard guerrillas in the Sunni militant stronghold.

The new "Fallujah Brigade," put together by former Saddam Hussein-era generals, will likely include some former army soldiers who fought against the Marines over the past month, U.S. Marine Lt. Gen. James Conway said.

Conway insisted that the U.S. withdrawal did not mean a let-up in the pursuit of the guerrillas.

"They understand our view that these people must be killed or captured," Conway said. "They have not flinched. And their commander has said as much to his assembly of officers."

The "Fallujah Brigade," led by former Republican Guard member Maj. Gen. Jassim Mohammed Saleh, fanned out and imposed a cordon around nearly the entire southern half of Fallujah.

If all goes well on Fallujah's south side, the Iraqi force will next replace Marines in the north within a few days, a U.S. official said on condition of anonymity.

Scores of Iraqis gathered in the streets Saturday, some flashing "V" for victory signs and raising the Iraqi flag. Motorists drove through the streets, shouting "Islam, it's your day!" and "We redeem Islam with our blood!"

The U.S. base in Najaf, meanwhile, came under mortar fire Sunday morning, despite claims by mediators that al-Sadr's al-Mahdi Army agreed to a truce supposed to last through the day. There were no casualties from the mortar fire, U.S. officials said.

Still, al-Sadr appeared to be looking for a way to end his confrontation with U.S. forces while avoiding arrest, mediators said.

Najaf's police chief, Ali al-Yasser, was seeking to meet U.S. officials Sunday to present a five-point proposal, the mediators said.

But the top coalition official in Najaf, Phil Kosnett, insisted al-Sadr must "face justice" and said there were no plans for a Sunday meeting. "The coalition is not negotiating with anyone on any five-point plan," he said, though the coalition "meets with local officials every day to discuss the situation."

The plan, put together by tribal leaders after talks with the Najaf police chief, calls for the al-Mahdi Army to leave Najaf and for al-Sadr not to be jailed on a murder charge until a new government is formed, according to Hakem al-Shibli, a tribal leader and member of the negotiating team.

He said Najaf's tribes would reject any American demand to arrest al-Sadr, who is wanted for alleged involvement in the slaying of a rival cleric last year. "If the Americans insist on it, despite the compromises that Seyed Muqtada has made, it would not be just," al-Shibli said.

The mediators — made up of tribesmen and a former judge — received the blessing of the office of Grand Ayatollah Ali al-Husseini al-Sistani, Iraq's most senior and influential Shiite cleric, al-Shibli said.

However, an al-Sadr spokesman who met with the mediators Saturday, Sheik Qais al-Khazali, was less optimistic, saying all other efforts to end the standoff had failed because of Americans. He said that if the Americans rejected a peaceful settlement, the al-Mahdi Army would fight.

"All the political attempts to reach a peaceful settlement have failed. As you know, it is all because of the American side and not us. We prefer negotiations and want to avoid bloodshed," al-Khazali said.

Hundreds of U.S. troops are deployed outside the Najaf-Kufa area, and a contingent has moved into a base within the city, about five kilometers (three miles) from sensitive holy sites at the heart of Najaf. The Americans have clashed occasionally with al-Sadr followers outside Najaf.

The U.S. military moved to capture al-Sadr after his militia staged an uprising across the south, sparked by the arrest of one of his aides. That uprising has died down, but his militiamen still dominate Najaf, Kufa and Karbala, the three holiest Shiite cities in Iraq.

The new proposal calls for:

— Withdrawal of coalition forces from the center of Najaf and the nearby city of Kufa.

— No American patrols in Najaf and Kufa.

— A guarantee al-Sadr's militia will refrain from shooting at coalition troops.

— An end to any armed presence in Najaf.

— Legal procedures against al-Sadr left for a new elected government.