U.S. tanks, helicopters and jets attacked fighters loyal to a radical Shiite cleric in this holy city Wednesday, partially destroying a mosque used by insurgents and setting seven hotels ablaze. Twenty-two militants were killed.

The cleric, Muqtada al-Sadr (search), urged his followers to resist and compared their struggle to the Vietnam War (search) in his first news conference since the standoff began more than a month ago.

American forces killed 22 militants, and six coalition soldiers were wounded, U.S. Brig. Gen. Mark Kimmitt said in Baghdad. Four of the soldiers returned to duty.

Iraqi leaders in another holy city, Najaf (search), discussed how to peacefully resolve the confrontation between al-Sadr and the U.S.-led coalition, which is seeking to arrest al-Sadr in the murder of a rival cleric. Coalition officials have said they welcome efforts to work for a peaceful solution, even though they will not negotiate with the cleric and want him to face justice.

Half of the Mukhaiyam mosque in Karbala (search) was destroyed in the fighting. Most shops in Tal al-Zeinabiya, a central market, and three ambulances and two military vehicles also were destroyed.

Fighting subsided by dusk as the call for evening prayers spread across Karbala from loudspeakers at the Imam Hussein mosque, one of the most sacred shrines of Shia Islam.

Iraqi guards manned the shrine gates to prevent al-Sadr's fighters from entering. Explosions and machine-gun fire continued intermittently as night fell. Fighters pushed a wounded comrade down a street on a pushcart. Jets flew overhead as militiamen took up new positions near another holy site, the Imam Abbas shrine.

Al-Sadr's fighters acknowledged they lost control of the Mukhaiyam mosque, less than a mile from the Imam Hussein shrine.

"We put up a very stiff resistance," said Ameer Latif, a 30-year-old militiaman. Another fighter, Amar Haider, leaned against a wall with his Kalashnikov rifle and said: "God willing, we shall still be victorious."

Late Wednesday, three explosions resounded in Najaf, and residents said U.S. forces appeared to be making an armed incursion into the city. At least one civilian was killed and another was wounded, Iraqi authorities said.

Al-Sadr is holed up in Najaf. He met with reporters there Wednesday -- his first press conference since his militia, the Al-Mahdi Army, launched attacks on attacks on coalition troops in Baghdad and other cities in early April.

"I appeal to the fighters and mujahedeen in Karbala to stand together so as none of our holy sites and cities are defiled. We are prepared for any American escalation and we expect one," al-Sadr said.

"Let remind you of Vietnam," the young cleric said. "We are an Iraqi people that has faith in God, and his prophet and his family. The means of victory that are available to us are much more than what the Vietnamese had. And, God willing, we shall be victorious."

Al-Sadr also referred to the abuse of Iraqi detainees by U.S. troops at Saddam Hussein's (search) notorious Abu Ghraib prison (search).

"Look at what they have done. Look at the torture they have committed against our detainees. Could anyone who came to rid us of Saddam do this?" al-Sadr said.

The new U.S.-appointed governor of Najaf, Adnan al-Zurufi, said Wednesday he believed his American backers will give another week to efforts to find a peaceful end to the standoff in Najaf.

"If you assess U.S. military movements in terms of territorial gains, then U.S. forces a week from now will enter certain areas of the city that will in turn make the prospect of a peaceful settlement very weak," al-Zurufi said.

In Karbala, hundreds of Iranian and Iraqi pilgrims were trapped in hotels by the fighting. Following one large explosion, Shiite militiamen chanted "Allahu Akbar," or God is Great, apparently indicating they had hit a coalition target.

Pilgrims, including women in black veils, peered from hotel windows, only to scramble back at the sound of gunfire. Rickety, wooden market stalls were deserted. Men gathered on rooftops to watch the distant battles.

One militiaman fired two mortar shells, then picked up the firing tube and scampered away shouting: "I hate them, I hate them."

A witness counted the bodies of 14 Iraqis on a main road, and said U.S. snipers were targeting anyone who moved in the mostly empty streets.

Brig. Gen. Kimmitt said coalition soldiers came under fire from insurgents in the Mukhaiyam mosque area, and found large weapons caches after the Iraqi fighters were pushed out.

On Tuesday, Iraqi political and tribal leaders in Najaf said al-Sadr will end the standoff with American troops if the coalition postpones its legal case against him and establishes an Iraqi force to patrol the city.

However, the offer hinges on an agreement that U.S. forces pull out of the city and Kufa, and al-Sadr's militia lays down its weapons, leaders said.

"We do think it's a positive sign that Iraqi leaders are stepping forward and they are trying to make a constructive contribution to minimize bloodshed in their own country," coalition spokesman Dan Senor said. However, he said al-Sadr must disband his militia and order it to withdraw from government buildings.

Early Wednesday, U.S. soldiers killed six insurgents who attacked patrols with rocket-propelled grenades in separate engagements in east Baghdad, the military said.

On Wednesday night, three mortars were fired toward the Italian Embassy in Baghdad but no one was harmed, Italy's ANSA news agency reported. The shots apparently missed the building.