Iraq's interim prime minister issued a decree Sunday allowing a rebellious Shiite Muslim cleric to reopen a newspaper whose closure sparked a rebellion against U.S. forces, while U.S. planes struck Fallujah in an attack that shook a tenuous peace there.

In southwestern Baghdad, a car packed with explosives detonated early Monday near a police station, killing at least eight people and injuring as many as 25.

The al-Hawza newspaper was closed by U.S. administrator L. Paul Bremer on March 28 in an attempt to squelch criticism from the cleric, Moqtada Sadr. The closure became a rallying cry for Sadr's forces, and ensuing fighting across Shiite areas took a bloody toll on U.S. forces.

Prime Minister Ayad Allawi's move was a clear rejection of Bremer's approach and an attempt to bring the powerful cleric and his followers into the political mainstream. Allawi said in a statement that the newspaper should resume publication "to open the way to all Iraqis' activities, including the trend this newspaper represents, to participate" in democracy.

A spokesman for Sadr, Ahmed Shaibani, said the announcement showed that "the decision to close the newspaper was wrong since the beginning. It was a black spot in the history of the U.S. civil administration in Iraq."

In closing al-Hawza, Bremer said that the newspaper, which featured the cleric's diatribes against the United States, was inciting violence against the U.S. occupation. Around the same time, Bremer also ordered the arrest of one of Sadr's top deputies in the Shiite holy city of Najaf. The two events sparked an uprising among Sadr's militia, the Mahdi Army, and made the cleric a symbol of resistance among Shiites who admired his rejection of the occupation.

Sadr, who had not been seen in public for nearly two months, attended Sunday evening prayers in Najaf.

As Allawi extended an olive branch to Sadr in Shiite areas, he also offered support to U.S. efforts to quell resistance in Fallujah, a city west of Baghdad that has been the focus of violence led by Sunni Muslim opponents of the occupation.

Allawi said U.S. officials sought his permission before carrying out a bombing after Marines and insurgents engaged in a gun battle early Sunday.

The U.S. military said in a statement that the airstrike hit a "known terrorist fighting position" that was occupied by 25 fighters for Abu Musab Zarqawi, a Jordanian whom U.S. officials consider the most-wanted insurgent in Iraq. Local reports said at least 12 Iraqis were killed in the strike. Neighbors in the area insisted that only the members of a family not involved in the resistance were killed.

Deputy Secretary of State Richard L. Armitage, during a brief visit to Baghdad, also said that the Iraqi government was consulted in advance of the bombing. In a news conference with Iraqi Foreign Affairs Minister Hoshyar Zebari, Armitage said Iraqi officials were "fully informed and agreed with the need for action."

Iraq is now a "sovereign government," Armitage said. "Our job is to support it to the absolute extent we can. The Iraqis are making the decisions. . . . We are not in the front seat with our hands on the steering wheel."

Armitage, who stopped in Baghdad at the end of a 10-day swing through South Asia and the Middle East, joined Zebari in criticizing the Philippine government for promising to withdraw its 51 soldiers from Iraq after kidnappers threatened to kill a Filipino hostage.

"In my view this sets a bad precedent," Zebari said. "It sent all the wrong signals. Terrorists should not be rewarded."

Philippine forces are scheduled to complete their withdrawal from the country Monday. There was no word Sunday on the fate of the hostage, Angelo de la Cruz, a truck driver. The release of another hostage, an Egyptian who is also a truck driver, was promised Saturday after his company agreed to quit doing business in Iraq. But his fate was also unknown Sunday.

At the appearance with Armitage, held in the newly reopened Foreign Ministry, Zebari said the Iraqi interim government plans to announce on Monday the appointment of more than 40 ambassadors, including assignments to most Arab states. He said that "all Arab countries want to strengthen their relations with Iraq" and that Saudi Arabia and Kuwait, which severed diplomatic relations with the government of President Saddam Hussein, have been sending "positive signals" about resuming those ties.

Meanwhile, members of the Iraqi National Guard, backed by U.S. troops, said Sunday that they arrested a leader of the resistance -- Hussein's cousin, the former head of his personal security force. Sufien Maher Nassiri was apprehended at his house in Tikrit with four other people.

According to an Iraqi military source, Nassiri was a commander of the Republican Guard intelligence section and had fled to Syria after the government fell. He returned to Iraq two months ago and was instrumental in ordering attacks against Americans in central Iraq, the source said.

The Iraqi justice minister, who survived an assassination attempt by a suicide bomber on Saturday, said he believed that former supporters of Hussein, and not foreigners, were behind many attacks, including the one on him. U.S. officials have said Zarqawi orchestrates many of the attacks. A group affiliated with the Jordanian claimed Sunday to have sent the suicide bomber who plowed into a convoy carrying the justice minister, Malik Douhan Hasan, killing five people.

But in an interview on al-Arabiya satellite television, Hasan said he was not convinced that Zarqawi was behind the attack. "I think Zarqawi is just a legend," he said. "I think Saddam's loyalists did these attacks."

In Hussein's home town of Tikrit, two car bombs exploded Sunday outside an Iraqi National Guard training station and at a police station. One policeman was killed.

Special correspondents Omar Fekeiki and Khalid Saffar contributed to this report.

An Iraqi chants anti-American slogans after a U.S. airstrike in the western city of Fallujah. Local reports said at least 12 Iraqis were killed.