The fighting, which lasted for four hours and left at least 30 people wounded, pitted the Mehdi Army of firebrand Shiite cleric Moqtada al-Sadr against US-led forces, sources in the defense and interior ministries said.

"We strongly condemn the attacks of US and Iraqi forces, and we call on the Iraqi government to protect its citizens against these kinds of attacks," Sahib al-Amiri, an official in Sadr's movement, told AFP Friday.

He said US forces had detained a Shiite imam living in Sadr City, Adnan al-Oneibi.

A statement by the US military said a joint US-Iraqi raid had been conducted in eastern Baghdad as part of an operation to restore security to the violence-plagued capital.

"The forces were immediately engaged by insurgents and a firefight ensued," said a US statement. "The purpose of the raid was to capture an insurgent leader responsible for numerous deaths of Iraqi citizens."

It said no US or Iraqi forces were injured.

The militias are seen as an increasing threat to the stability of the country and Sunni politicians especially have called for them to be dismantled, accusing them of being involved in kidnapping and killings of Sunni Arabs.

A defense ministry official said the US-led operation began at 2:00 am (2200 GMT Thursday) in the impoverished Shiite stronghold which has a population of about two million. The force pulled out by 6:00 am (0200 GMT).

"The situation is tense and the Mehdi Army is deploying in the streets," said the official, adding that the US raid targeted several individuals believed to be involved in kidnapping rings.

Since battling Mehdi fighters in Sadr City and the southern shrine city of Najaf from April to August 2004, US forces have largely avoided confrontation with the powerful Shiite militia.

In February and March, however, US-led forces carried out similar raids against suspects involved in kidnapping rings living in eastern Baghdad, which resulted in clashes with the local Shiite militias.

Over the past month there have been a series of high-profile kidnappings, often involving the seizure of dozens of people in broad daylight by men wearing uniforms of Iraqi security forces.

Last Saturday, Sunni woman MP Taiseer al-Mashhadani and several of her bodyguards were abducted and on Tuesday a deputy minister and his 19 bodyguards were kidnapped and held for 10 hours before being released.

In other violence, two Iraqis were killed and four policemen wounded in clashes when insurgents attacked the Shiite mosque in Salman Pak, south of Baghdad, and the nearby national police headquarters, the US military said.

Police repelled an attack by an unknown number of "terrorists" at the Salman Pak mosque, the military said.

The attack came a day after a bomb exploded next to a revered Shiite shrine in the southern town of Kufa, killing 12 Shiites including Iranian pilgrims.

The US military said it killed two rebels and detained five others during a raid near Baquba, northeast of Baghdad, while targeting a reported "terrorist cell leader linked to multiple senior Al-Qaeda leaders throughout the region."

Meanwhile, a former US soldier in Iraq pleaded not guilty to raping and murdering an Iraqi woman after allegedly killing three of her relatives, charges President George W. Bush said merited "absolute justice".

Steve Green, 21, stood passively in court with his hands in front of him on Thursday as his lawyer entered the plea on charges of raping and murdering an Iraqi woman and members of her family in the town of Mahmudiyah, south of Baghdad.

In an interview with CNN Thursday, Bush said in an apparent reference to Green that he was facing "very serious charges and what the Iraqis must understand is that we will deal with these in a very transparent up-front way".

Bush's assurance came as Iraqi Prime Minister Nuri al-Maliki called for the elimination of the blanket immunity enjoyed so far by foreign troops from Iraqi law.

He has also demanded an independent Iraqi probe or a joint investigation into the allegations against US soldiers.