· 'Hostage slaughter houses' foundFighting today raged in the heart of Falluja as US marines took control of the mayor's office and claimed to be in control of 70% of the city.
· Reports: 20 Iraqi troops captured
· Three of Allawi's relatives kidnapped
As the offensive entered its third day, the US military said 11 US troops and two Iraqi soldiers had been killed in the fighting. The number of insurgent fatalities is unknown but believed to be in the hundreds.
Relief groups say they are deeply worried about the fate of civilians cut off from food and medical supplies. Most of the city's 300,000 population has fled, but tens of thousands of people are thought to have stayed behind.
Mosques, bridges, military and civic buildings were today seized in the fighting from north to south and Iraqi troops discovered what their commander called "hostage slaughter houses".
Major General Abdul Qader Mohammed Jassem Mohan, in charge of Iraqi forces in the battle, said his soldiers had entered buildings in the Jolan district and discovered black clothing worn by kidnappers and records of hostage names.
A US military spokesman said resistance was limited to "small pockets of fighters" but there were reports of heavy fighting and snipers.
"There are still many snipers in buildings in Jolan," Alaa Abboud, an Iraqi soldier just back from the area, told Reuters. "We are trying to surround them and take them out."
A BBC correspondent with the US marines said the unit he was with was under heavy rifle and rocket fire, some coming from a mosque, and US forces had fired at least one tank shell at the building.
Major Francis Piccoli, of the 1st Marine Expeditionary Force, said insurgent fighters were now concentrated in a strip along a main road running east-west.
"There's going to be a movement today in those areas. The heart of the city is what's in focus now," he said.
Insurgents later handed a video of 20 Iraqi national guardsmen to news organisations that they claimed they had captured, but its authenticity could not immediately be verified.
Rebels hit back yesterday with attacks on police stations in Baquba and Baghdad, and it today emerged that three relatives of the interim Iraqi prime minister, Ayad Allawi, were abducted from their Baghdad home. The kidnappers threatened to kill them if Mr Allawi's government did not halt the offensive.
"If the agent government does not meet our demands within 48 hours, we will behead them," a previously unknown group calling itself Ansar al-Jihad said in a statement posted on an Islamist website.
Gunfire and explosions also echoed across the northern city of Mosul, but it was not clear who was fighting whom. There were reports from Baghdad that masked men armed with rocket-propelled grenade launchers and assault rifles had seized a bridge.
Two British soldiers were injured, one seriously, in separate attacks close to the Camp Dogwood military base south of Falluja.
The Ministry of Defence said a Lynx helicopter pilot was badly wounded when his aircraft came under small arms fire on a mission at 11.20am local time. The soldier was transferred to a military hospital in Baghdad and his family informed.
Iraqi, US and British leaders argue it is necessary to clear Falluja of insurgents to improve security ahead of Iraqi elections, scheduled for January 27 next year.
However, the assault has led infuriated Sunni clerics to urge Iraqis to boycott the vote.
Speaking on BBC Radio 4's Today programme, Robin Cook, the former foreign secretary, said "heavy-handed" tactics would only result in more violence from insurgents.
There was a lull in fighting overnight but the battle began again early this morning. US and Iraqi troops are trying to draw out insurgents and discover their positions before they move in on them.
The US military said the entire city would be under its control within two days if the assault stayed on schedule. It claims to have captured 127 insurgents.
Guardian Unlimited © Guardian Newspapers Limited 2004