The radical Iraqi cleric who leads the Shia militants fighting US-led forces in Najaf has pledged victory or death after more than a week's fighting.
Najaf is one of the holiest sites for Shia Muslims
Moqtada Sadr demanded the government's resignation and withdrawal of foreign forces when he spoke to followers at the holy city's Imam Ali shrine.
A truce has been holding since American troops pushed Mr Sadr and his forces back into the area around the shrine.
The city woke to birdsong on Saturday as US tanks and Iraqi guns kept silent.
The BBC's Alastair Leithead notes that Mr Sadr has often sent out mixed messages and his hard words do not necessarily mean an end to negotiations or the peace which the city has been enjoying.
A spokesman for Mr Sadr has said he is prepared to pull out of Najaf if the US-Iraqi forces also withdraw.
Other conditions include:
- sacred Shia sites to be administered by religious authorities
- captured fighters to be released and Sadr supporters granted an amnesty
- basic services to be restored in Najaf
Elsewhere in Iraq, one US marine and one soldier were killed in separate incidents in western al-Anbar province.
Mr Sadr's fighters in Najaf have reportedly suffered heavy losses in the face of US airpower and tanks.
But the cleric, who was reportedly injured in the chest, arm and leg and was seen wearing bandages, remained defiant, repeating calls for interim Prime Minister Iyad Allawi to resign.
"We will remain here... until victory or martyrdom," Mr Sadr told his fighters on Friday.
"I will not leave this holy city... I advise the dictatorial, agent government to resign," he added.
He said that whatever happened in Najaf, the Americans should not be trusted and the struggle should continue.
The joint US-Iraqi offensive in Najaf has triggered pro-Sadr protests in Baghdad, Kufa, Samarra, Mosul, Falluja and Diwaniya.
In the southern Iraqi town of Hilla, about 20 Polish soldiers were temporarily trapped by fighters loyal to Mr Sadr at a police station.
In Basra, however, a British journalist was released by his kidnappers after the cleric's intervention.
A US military official said troops had been given orders to halt the Najaf offensive, which was launched on Thursday with 2,000 US marines and 1,800 Iraqi troops.
The US-led force is maintaining a cordon around the Imam Ali shrine, the cemetery and the old city.
Earlier, Interior Minister Falah Naqib told Reuters news agency the cleric would "not be touched" if he left the shrine peacefully.
BBC Arab affairs analyst Magdi Abdelhadi says the Iraqi government cannot afford to let Mr Sadr leave Najaf with his militia intact.
But neither can the cleric disarm them as it would be political suicide, he says.
Mr Sadr is thought to have about 1,000 loyal fighters. It is not clear how many have been killed in more than a week of fighting.
Iraqi and US officials have said that, in the event of an assault on the central area, only Iraqi forces will enter the shrine, to avoid inflaming Shia sentiment.