Iraqi forces clashed with anti-Al-Qaeda militants in Baghdad for a second straight day on Sunday, as American troops backing them ordered fighters to hand over their weapons or face reprisals.
An Iraqi commander said a house-to-house operation would begin if militiamen failed to surrender their guns. "We are waiting for orders and then we will search the houses," he said.
Automatic weapons fire crackled intermittently in the central impoverished Baghdad neighbourhood of Fadel, where fighting erupted on Saturday after Iraqi special forces arrested militia leader Adel Mashhadani.
He is the local chief of the Sahwa or Awakening militia of mostly Sunni former insurgents trained and financed by US and Iraqi forces to battle Al-Qaeda militants.
Baghdad military command spokesman Major General Qasim Atta said Mashhadani was arrested along with his aide Salman Kadduri over allegations of murder and extortion and "violating the constitution."
"There are 80 civil suits against him for murder and extortion," he said.
"We also have information that Mashhadani heads the military branch in Fadel of the (banned) Baath party" of executed Iraqi leader Saddam Hussein, Atta said.
When Iraqi special forces went to arrest Mashhadani on Saturday they "came under fire," sparking the deadly firefights, he added.
Two Iraqi civilians were killed and 15 other people were wounded, including four soldiers, the interior ministry said.
Iraqi soldiers blocked access to Fadel on Sunday as military police with lists of names checked the identities of those wanting in or out, an AFP correspondent said.
The fighting is the worst central Baghdad has seen since US and Iraqi forces, backed by Sahwa fighters, waged war in 2007 against Al-Qaeda and its supporters who had taken over the area.
Atta said Iraqi forces "are not hunting down the Sahwas but carrying out a search operation for suspects wanted by the judicial authorities and gangsters who are firing on our forces."
The US-backed Iraqi forces were confronted on Sunday by snipers.
As US helicopters carried out reconnaissance flights over the area, American troops in armoured vehicles criss-crossed the neighbourhood blaring messages in Arabic from loudspeakers ordering fighters to hand over their weapons by 0900 GMT or face reprisals.
"Anyone who still holds weapons after this deadline will be considered a terrorist," the message said.
US Lieutenant-Colonel David Buckingham said that nearly half of some 100 Sahwa members "freely gave back their weapons" before the deadline expired.
Some Sahwa militiamen were bitter at having to give up their guns.
"I surrendered my weapons because I did not want the Americans to bomb my house and my neighbourhood. There are women and children here," said Qussay, 32, declining to reveal his family name.
"The Sahwas have been liquidated and Al-Qaeda will return and the attacks will return with them. And then who will protect the neighbourhood?" he told AFP after handing in a Kalashnikov.
"This is how the Americans thank us after all we did to throw out Al-Qaeda."
Mashhadani helped Iraqi and US forces oust Al-Qaeda from Fadel but then went on to make the neighbourhood his own stronghold.
The Sahwa, known as Sons of Iraq by the US military, played a crucial role in driving Al-Qaeda fighters from Baghdad and other areas of Iraq, dramatically reducing levels of violence across the country.
But the Shiite-led Baghdad government has always been wary of the estimated 94,000 Sahwa militiamen, and the former insurgents have voiced fears that they will be sidelined in the long term.
Prime Minister Nuri al-Maliki has said that 20 percent of all Sahwas, including 54,000 in the Baghdad area alone, would be integrated into the security forces while the rest would be offered vocational training.
Some Fadel residents were leaving in haste on Sunday, clutching what personal belongings they could carry.
"It's too dangerous so I'm going to stay with relatives in Nasiriyah" in southern Iraq, said university student Anmar Mahmoud.