US officials in Iraq say they are seeking a negotiated solution to end the fighting in Falluja but warn they will resume an offensive if talks fail.
A football field has been turned into a makeshift cemetery
A tentative truce between American-led forces and insurgents has been extended for a few more hours until 0600 GMT on Monday to allow more talks.
Brig Gen Mark Kimmitt said the halt in hostilities was to allow "the political and discussion track" to go forward.
The switch of focus to mediation came as Iraq had its quietest day in a week.
US President George W Bush on Sunday described the week's events as "tough".
Speaking after attending an Easter church service in Texas, Mr Bush said it was hard to tell whether the worst of the clashes were over.
But he repeated his belief that what coalition forces were doing in Iraq was right.
Meanwhile the head of the Arab League, Amr Moussa, described the recent fighting in Fallujah as unacceptable and extremely serious.
It is estimated more than 600 Iraqis have been killed during the past week's fighting, the head of the city's hospital told the Associated Press.
"We have reports of an unknown number of dead being buried in people's homes without coming to the clinics," Rafie al-Issawi added.
In response, Marine Lt Col Brennan Byrne told AP: "What I think you will find is 95%
of those were military-age males that were killed
in the fighting."
Despite the truce, two marines were wounded by snipers in Falluja and an Iraqi man was killed in one of several clashes since the ceasefire began at 0600 GMT on Sunday, the US military said.
And on Monday there were reports of three marines killed in al-Anbar province west of Baghdad.
Insurgents also shot down an American AH-64 Apache gunship near Abu Ghraib - a town that has seen heavy fighting in recent days. The two-man crew was killed.
Gen Kimmitt said the suspension of American military operations in Falluja would continue to allow an Iraqi mediation team to have further talks inside the town.
His forces would remain in their positions and if the talks failed, the offensive was likely to resume, he added.
But the coalition suffered a setback with the news that an Iraqi battalion sent to support the US troops had refused to go to Falluja on the grounds that its members had not signed up to fight Iraqis, the US military reported.
The ceasefire call on the Iraqi side was issued by tribal, religious and community leaders in Falluja, Iraqi mediators said, adding that it is set to be extended overnight.
Noriaki Imai, 18, Japanese researcher
Nahoko Takato, 34, Japanese aid worker
Soichiro Koriyama, 32, Japanese photojournalist
Nabil George Razuq, 30, Palestinian aid worker
Fadi Ihsan Fadel, 33, Canadian aid worker
Thomas Hamill, 43, US civilian worker
After a week of ferocious battles with both Shia and Sunni insurgents, the US military does appear to be giving talks a chance, says the BBC's Caroline Hawley in Baghdad.
Gen Kimmitt made it clear that coalition forces were determined to deal with militants loyal to Shia cleric Moqtada Sadr who remain in full or partial control of southern cities, including Najaf, Karbala and Kufa.
But he did not rule out a negotiated settlement with Mr Sadr.
A reporter for the London-based Daily Telegraph
in Falluja says he saw the bodies of two Germans, following reports that two German embassy security guards had gone missing.
They were killed while travelling from Jordan to Baghdad on Wednesday, the report said.
The German foreign ministry later said the two were probably dead.
Later Chinese state news media reported that seven men from the eastern Fujian province were kidnapped after entering Iraq from Jordan, probably in Falluja.
Meanwhile the deadline given by kidnappers of US civilian Thomas Hamill, who threatened to kill him unless US troops ended the Falluja operation, passed with no indication about his fate.
There is still no news on the three kidnapped Japanese civilians. Their abductors were reported to have said they would release their hostages on Sunday.
A British civilian Gary Teeley, who was kidnapped in the southern city of Nasiriya six days ago, has been handed over to coalition forces there and is safe and well, the Foreign Office in London said.
Al-Jazeera television also reported that eight foreign lorry drivers taken hostage had been released on Sunday after Muslim clerics called for all kidnapped civilians to be freed.