Sharply intensified U.S. strikes on Fallujah, which continued Friday night, were aimed at preparing for a possible military offensive that would return control of the insurgent-held city to Iraq's interim government, U.S. officials said.

"We'll continue to do these operations for the next few days, and then we'll see where we are," said a U.S. official in Baghdad. "It's pretty much all what the Iraqis want."

The official, who spoke on condition of anonymity, described 12 hours of overnight strikes by American helicopters, fighter-bombers, field artillery and tanks as "shaping operations." Military commanders use the term as shorthand for battlefield preparation, combat operations specifically intended to remove enemy strong points in advance of an assault.

The new wave of strikes, which also included U.S. and Iraqi infantry firing toward the city from its outskirts, was bracketed by clear signals that Iraq's interim government had lost patience with efforts to avoid a final assault on the city through negotiations.

The first explosions were heard two hours after a senior Iraqi official threatened to "smash" the city if it did not surrender foreign fighters. The State Department on Friday officially designated as terrorists the fighters led by Abu Musab Zarqawi, the Jordanian who heads the Monotheism and Jihad group.

Also Friday, a Fallujah cleric who had been the most prominent member of a delegation negotiating for a peaceful handover of the city was arrested. Khalid Hamoud Jumaili, who heads an insurgent group known as Mohammad's First Army, was taken into custody after Friday prayers at a mosque in a town 10 miles south of Fallujah.

"I think it's more military than political for sure," a U.S. diplomat said of the arrest. The diplomat asked not to be identified further because the interview had not been cleared by his superiors in Washington. "Not to say that when it's done, this won't be seen as a turning point in the political process here."

Officials stopped short of saying that a final decision had been made to retake Fallujah, a city of 300,000 that has been controlled by a volatile mix of local insurgents and foreign fighters since April, when a Marine offensive was abruptly halted on orders from the White House. Since political authority was turned back to the Iraqis in June, the final say on major U.S. military operations has resided with the government of the interim prime minister, Ayad Allawi.

But both camps gave the appearance of preparing for battle.

Residents reported that foreign fighters were returning to Fallujah from a smaller city, Hit, where they had gone in recent days. And officials in Baghdad privately emphasized the importance of finally asserting the central government's authority in a city that has been at once a potent symbol of insurgent defiance and an operational headquarters for bombings that have destabilized the capital for more than a year.

"If we have a fight in Fallujah, it's going to be very bloody and nasty," said another U.S. official. "Against that, one has to weigh how many car bombs you have in Baghdad that come from Fallujah."

Ten people were killed on Friday in southern Baghdad when a suicide car bomber veered toward a convoy of blue-and-white Iraqi police vehicles. The bomb, loaded with an estimated 300 pounds of explosives, killed four Iraqi laborers, a family of four and two other bystanders, according to a military statement. The bomb left an 18-by-12-foot crater nearly five feet deep in the street.

The attack came on the first day of Ramadan, the holiest month in the Islamic calendar, marked by fasting and -- last year in Baghdad -- a torrent of devastating car bomb attacks in the capital.

A U.S. military statement said the airstrikes were intended to preempt a similar wave of terror attacks by targeting buildings associated with Zarqawi. His group has asserted responsibility for kidnappings, beheadings, car bombings and other suicide strikes in Iraq, including bombings inside Baghdad's heavily fortified Green Zone on Thursday that killed three American civilians and as many as six Iraqis.

"Operations in Fallujah will continue so long as terrorists remain in the city," the statement said.

Inside the city, terrified residents believed the final assault had begun.

Electricity and water were cut off to the city just as a fresh wave of strikes began Thursday night, an action that U.S. forces also took at the start of assaults on Najaf and Samarra. The only light was from illumination rounds, slowly descending flares that bathed the cityscape in an eerie half-glow.

In the hours that followed, U.S. firepower targeted the concrete blast walls and other fortifications left behind by American and Iraqi forces when they pulled out of the city in April and used as cover by the insurgents since.

M1-A1 Abrams tanks and other armor massed at the northern entrance of the city, while armored Humvees and other armor approached the city from the south. Neither column entered the city, but at about 3 a.m. Marines and members of the Iraqi National Guard exchanged small arms fire with insurgents on the city's outskirts.

Fallujah residents said the strikes destroyed 11 houses and badly damaged the Maathid mosque and the city's railway station. A family of 11 fleeing the bombing was killed when their vehicle was hit by a rocket residents said was fired by the Americans.

A new U.S. offensive on Fallujah would risk reigniting sympathies that made the city a symbol of a surging Iraqi nationalism when Marines besieged it in April. Civilian casualties were reported in the hundreds, and the city was widely seen here as being punished for the mutilation of U.S. contractors in an ambush.

At the time, foreign Arabs arriving in Fallujah were welcomed as reinforcements. In the months since, the extremists among them, led by Zarqawi, have alienated many local insurgents. But as foreign fighters returned from Hit, where they had battled Marines during the week, some residents said the looming anticipation of attack was renewing the alliance.

"We were happy when they left because we thought this was the end of the problem, but now we are happy they are back because of the threats of Allawi," said Mohammaed Saeed Farhan, a painter. "We wanted peace and that was the aim of the delegation."

But Iraqi and U.S. officials say that the intent behind taking military control of the city, even with U.S. armor leading the way, would be to fulfill the promise to hold nationwide elections in every major city in the country -- but especially in the Sunni Muslim centers north and west of the capital.

"To put it bluntly, we do not want a situation where insecurity in Sunni areas leads us to a crippled election," the diplomat said. "The country is changing. This is not April."

Staff writer Robin Wright in Washington contributed to this report.