Loyalists of Shiite Muslim cleric Moqtada Sadr remained in control of the gold-domed Imam Ali shrine on Saturday after failing to reach an agreement with representatives of Iraq's most senior Shiite leader on how to hand over the holy site.

Sadr and his lieutenants have promised to vacate the shrine as ordered by Iraq's interim government, but there was no indication Saturday that they were moving to comply with that provision or with another, equally important government demand: that Sadr disband his armed militia, known as the Mahdi Army.

Although public areas of the shrine were empty of militiamen and weapons on Saturday afternoon -- the crowd inside appeared to be composed of unarmed Sadr loyalists -- hundreds of the cleric's militiamen, many carrying assault rifles and rocket-propelled grenade launchers, remained quartered in the network of narrow alleys that lead to the shine. As an announcement from the shrine's crackly loudspeakers urged militiamen to keep fighting, several of them insisted they would stay in their positions to resist the encroachment of U.S. military and Iraqi security forces.

"We will continue to fight," vowed Ali Smeisim, Sadr's chief deputy. He said the militia would use the labyrinthine urban landscape "to take cover and to fight the Americans."

The challenge facing U.S. and Iraqi forces, should they mount a full offensive against Mahdi Army militiamen near the shrine, was starkly evident on one road leading toward the holy site. Militiamen had set up sniper nests atop buildings. On the road, a thin wire led to a wooden cart stacked with bricks. Concealed amid the bricks was a homemade pipe bomb.

"Be careful! Be careful!" an old woman shouted. "Those wires are for bombs."

At the shrine, a top Mahdi Army commander, Akram Kaabi, said his men would "continue defending the city and our holy places."

The crisis had appeared on the verge of resolution Friday, when Sadr's aides announced they would remove weapons from the shrine and turn over the brick-walled compound to representatives of the country's most senior Shiite cleric, Grand Ayatollah Ali Sistani.

But aides to Sadr and Sistani were unable to agree Saturday on how to turn over keys to the shrine's gates, doors and safes, which are believed to contain millions of dollars deposited by religious pilgrims. Sadr's aides said they tried to hand over the keys to Sistani's representatives, who refused to accept them, demanding that the shrine first be evacuated. Smeisim said he wanted a delegation from Sistani's office to inspect the shrine and make sure its treasures were intact before a turnover.

Representatives of Sistani, who is undergoing medical treatment near London, refused. They said they would not travel to the shrine because it was unsafe.

Clashes around the shrine resumed Saturday evening after a relatively quiet day. Militiamen fired mortars toward U.S. Marine positions north of the shrine, prompting the Marines to respond with 155mm artillery. Loud bursts of small-arms fire echoed though the warrens around the shrine as militiamen skirmished with Iraqi police patrols on the outskirts of Najaf's old city area, which is home to the shrine.

Shortly after midnight Sunday, a line of tanks from the 5th Cavalry cascaded down from the cemetery and approached a split-level parking garage at the west side of the mosque complex.

As Bradley Fighting Vehicles fired tracers toward defensive machine-gun positions and an AC-130 Spectre gunship circled overhead, the Abrams tanks punched round after round into the concrete garage and the building above it, collapsing much of the westernmost end of the structure in a series of deafening roars.

Commanders declined to discuss the purpose of the raid, which lasted less than three hours and brought U.S. armor closer to the militants' refuge around the mosque -- and for the first time, from the rear. But major combat missions proceed only with the approval of the interim prime minister, Ayad Allawi, who has apparently sought to demonstrate to Sadr the urgency with which the government seeks a solution -- and the potency of the U.S. forces at its disposal if negotiations fail yet again. Sadr took the only visible step toward a solution, moving his militia's arms out of the shrine building Friday.

Seeking to encourage a peaceful resolution to the standoff, U.S. forces had paused offensive operations and patrols that might appear provocative. Sadr's aides had complained that the last attempt to negotiate a settlement, on Tuesday, was undermined by combat operations.

"No one can say we're not giving them a chance to work this thing out," said Army Maj. Bob Pizzitola, executive officer of the 1st Battalion, 5th Regiment of the 1st Cavalry Division, which patrols the vast Valley of Peace cemetery north of the shrine with U.S. Marines. The unit's log of enemy contacts included 13 entries over a period of 12 hours.

"Normally we have 13 in an hour," Pizzitola said. "This is one of the slowest days we've had since this started."

U.S. military commanders in Najaf and Iraqi leaders in Baghdad sought to determine whether Sadr's pledge on Thursday night that he would vacate the mosque was genuine and whether he would comply with demands to dissolve his militia. Hussein Mohammed Hadi Sadr, an elderly Shiite cleric who led a delegation to Najaf Tuesday representing a 1,200-member national political conference, urged Moqtada Sadr to "understand the depths of this crisis" and make a clear statement indicating whether he will hand over the shrine and dismantle his militia.

"The crisis in Najaf is tiring us and we are eager to reach a peaceful solution, a speedy solution, for we are in a race with time," said Hussein Sadr, who is a distant relative of Moqtada Sadr.

The suspension of offensive operations earlier Saturday did not extend to Kufa, the city adjoining Najaf that is also a Sadr stronghold. In an operation early Saturday, Marines stormed a police station held by Sadr forces, killing several militiamen and detaining more than two dozen young men found in a basement.

Elsewhere in Iraq, the U.S. military announced that two soldiers from the U.S. Army's 1st Infantry Division were killed Friday evening by a roadside bomb near the city of Samarra, about 65 miles north of Baghdad. Another soldier was killed in a rocket-propelled grenade attack in Baghdad on Saturday, the military said. Also on Saturday, one Polish soldier was killed and six were injured when a booby-trapped car exploded next to their convoy near Hilla, about 60 miles south of the capital.

An aide to Sadr said kidnappers had lifted their threat to kill a U.S. journalist who was abducted in the southern city of Nasiriyah with his Iraqi interpreter, the Associated Press reported. The kidnappers, calling themselves the Martyrs Brigade, had threatened on Thursday to kill Micah Garen of New York within 48 hours if U.S. troops did not leave Najaf. But Sadr aide Aws Khafaji said Saturday in Nasiriyah that he had spoken to mediators who said the death threat had been lifted. Khafaji said the mediators were working to have Garen released.

Chandrasekaran reported from Baghdad. Correspondent Karl Vick in Najaf contributed to this report.

In the Valley of Peace cemetery north of the Imam Ali shrine in Najaf, a U.S. Army soldier fires on insurgents loyal to Shiite Muslim cleric Moqtada Sadr.