More than a dozen Iraqi were killed and dozens injured while two US marines lost their lives and 13 others were hurt in fierce fighting for an international airport on the outskirts of Baghdad.
Iraqi information minister Mohammed Saeed al-Sahhaf told Al-Jazeera on Thursday night that a comprehensive counter-attack would soon be launched.
US troops were within 15 kms of downtown Baghdad and controlled the southern approaches to the capital, said Major General Buford Blount, commander of the 20,000-strong US 3rd infantry division. They even raided one of Saddam Hussein's presidential palaces.
Lead units of the multi-pronged US assault force, yet to be slowed by Iraq's Republican Guard, were "in the vicinity" of Baghdad's Saddam International Airport, said Navy Capt. Frank Thorp of US Central Command in Qatar.
Earlier, US forces had made big advances with Army troops closing on the capital from the southwest, crossing the Euphrates River and Marines approaching from the southeast in a long column along the Tigris River.
One US choppers was struck by Iraqi missile killing at least seven US troops and injuring four others.
However, Iraqi Information Minister Mohammed Saeed al-Sahhaf insisted US claims of being near the airport were untrue. "Their lies are endless," he told a news conference in Baghdad. He added that Republican Guard forces had engaged coalition forces in the area south of the city of Kut and "taught them lessons, a catastrophe," inflicting heavy casualties and forcing encircled coalition forces to retreat.
"We buried a lot of them today," he said. He denied the battle successes claimed by the coalition. "All this is to cover their disappointment and inability," he said.
In central Baghdad, Reuters correspondent heard an intense and sustained anti-aircraft barrage coming from the southern outskirts where US-led forces have been bombarding the city's defenders.
US military officials said four elite Iraqi Republican Guard divisions were moving south but had so far not directly engaged the US forces, who said they smashed two Republican Guard divisions in a northward blitz on Wednesday.
As the US-led war to topple Iraqi President Saddam Hussein entered its third week, Baghdad and its outskirts were heavily bombed overnight.
In an abrupt punch forward on Wednesday, US forces surged past the towns of Kerbala and Kut and captured key bridges over the Euphrates and Tigris rivers, preparing the way for an assault on Saddam's stronghold.
US TROOPS ENTER SADDAM'S PALACE
US troops entered one of Saddam Hussein's presidential palaces near Baghdad's international airport, a Central Command official said on Thursday. Navy Capt. Frank Thorp did not identify the palace and did not say if anything was found there. He said the troops had already left.
"They don't need to stay," he added.
It could not be determined whether the US troops were from a special operations unit or were part of the main force moving north from the Karbala area.
Two palaces are located near Saddam International Airport, just southwest of Baghdad.
The Radwaniyah Palace Complex is on the southeast edge of Saddam International and Presidential Palace North is on the northeast edge.
SADDAM VOWS TO REPEL AMERICANS
The Iraqi leader vowed his troops would repel the invading army. "They will not let them reach Baghdad," Saddam said in a letter to his niece, read on state television on Wednesday.
"They will cripple them until they return to their countries defeated, leaving our country for its people."
US officials say a "dagger is clearly pointed at the heart of the Baghdad regime," but say some US troops have crossed a notional "red line" into areas where the military believes Iraqi forces might be most likely to launch a poison-gas attack.
"If it's used, we'll be prepared," US Brigadier General Vincent Brooks told a briefing in Qatar on Wednesday.
US officials said Iraq had shot down a Black Hawk helicopter near the city of Kerbala and a US F/A-18 Hornet fighter-bomber was also down.
Overnight, US spy planes spotted Iraqi Republican Guard units moving south from the capital to counter the US attack, US military sources said.
US troops sent rockets streaking toward the Iraqi positions, and American officials said it was unclear how many Iraqi soldiers were on the move.
Major General Stanley McChrystal, vice director for operations for the US military's Joint Staff, said the dramatic US advance on Wednesday had effectively destroyed two of the six Republican Guard divisions guarding Baghdad.
Iraq denied this, saying morale was high.
US Defence Secretary Donald Rumsfeld warned Iraqi moves to bolster city defences meant tough fights lay ahead.
"Our forces have been pressuring them on the ground and from the air," he told reporters.
"My guess is, however, that the Republican Guard that pretty much ringed Baghdad...will probably represent some difficult days ahead and dangerous days...in terms of fighting."
In northern Iraq, Kurdish fighters, backed by small groups of US soldiers, advanced towards the northern oil town of Mosul on Thursday but were met by heavy machinegun and rifle fire.