United States troops say they have seized control of much of Baghdad's international airport.
US soldiers at the airport's entrance
Soldiers of the 3rd Infantry Division fought their way into the airport after a heavy bombardment overnight but were continuing to exchange gunfire and artillery fire with the Iraqis on Friday morning.
The Iraqis are still in control of the approach road and appear to be piling reinforcements into the area, reports say.
Power and water supplies have been cut in the Iraqi capital, which was hit by another night of heavy bombing.
The BBC's Andrew Gilligan correspondent says increasing numbers of residents are leaving the city.
In other military developments:
Sources say 14 lorries with Iraqi troops were speeding out towards the airport on Friday morning.
- Kurdish fighters, backed by small groups of US soldiers, advance towards the northern city of Mosul but meet heavy fire from Iraqi troops, Reuters reports
- US troops move into the centre of the holy city of Najaf to search for paramilitary fighters
- Further south, British soldiers push forward in operations to secure the second city of Basra, establishing what they say is a holding position across the southernmost bridge into the city
"We control the airport. It's a big area with a lot of buildings that need to be cleared but it's ours," Colonel John Peabody of the 3rd Infantry Division told Reuters.
In an assault that began on Thursday evening, US tanks moved along a single-lane road towards the airport with Iraqi fighters firing from all sides for four hours, the Associated Press reported.
At least 320 Iraqi soldiers were killed in the fighting in which about 1,000 American troops were deployed, US military sources said.
There were no reports of American casualties.
Early on Friday, US troops fought off an Iraqi counterattack some 20 kilometres (12miles) from the airport, destroying several tanks in a fierce firefight, Reuters reported.
Military analysts say the capture of the airport would both have propaganda value for the coalition and strategic importance as another airstrip to use to bring in supplies.
General Richard Myers, the top US military officer, has warned that there are "still a lot of tough fights
"Nobody should be euphoric that now that we are on the edge of Baghdad this thing is just about over," he said. "That's not true."
This first fighting on the ground around Baghdad, only 20 kilometres (12 miles) south-west of the city centre, erupted on Thursday evening after a ferocious
Baghdad was plunged into darkness overnight by its first blackout of the war which cut in as the assault on the airport began.
A number of loud explosions rocked the city centre of overnight as American warplanes kept up their pressure.
US Central Command in Qatar said coalition forces had struck the Iraqi Air Force headquarters, and Iraq's ability to control its air force had been diminished.
Baghdad residents spent the night gathered around candlelight and listening to the explosions, the BBC's Paul Wood reports.
It was unclear if coalition action caused the blackout and cut in water supplies but the BBC's Andrew Gilligan says it seems unlikely the Iraqi authorities would have cut supplies themselves.
The airport was reportedly defended by Republican Guards
General Myers has denied targeting the power grid and coalition forces have repeatedly stressed they do not want to damage civilian infrastructure.
The general has given an indication of possible coalition strategy for the capital, saying it may try to isolate whatever is left of the leadership in Baghdad and make it increasingly irrelevant.
"This notion of a siege and so forth, I think is not
the right mental picture," he added.
Iraq's influential Deputy Prime Minister, Tariq Aziz, told Italian TV that any fight for Baghdad would be "huge and costly".
In other developments:
The foreign ministers of France, Germany and Russia are due to meet in Paris to discuss the Iraqi crisis
- US Defence Secretary Donald Rumsfeld rules out any peace deal which would allow Saddam Hussein to remain in power in Iraq
The US Congress approves $80bn finance for war on Iraq but money earmarked for post-war reconstruction will not go to companies in France, Germany, Russia or Syria
- US forces say Ayatollah Sistani, a prominent cleric for Iraq's majority Shia Muslims, issued an edict calling on people to remain calm and not hinder operations by coalition forces but his office denied this, Arabic news channel al-Jazeera reports