Reining in the Mahdi Army and the other major militia, the Badr Brigades, remains one of the thorniest problems facing al-Maliki. His fragile Shiite-dominated government derives much of its power from the al-Sadr's faction and from the Supreme Council for the Revolution in Iraq, or SCIRI, which operates the Badr Brigades.

The US military said Mahdi Army militiamen fought back in the Sadr City raid and that the Americans called in an air strike and cordoned the sprawling east Baghdad region.

Late Wednesday the military said it had killed 10 suspected militia fighters and wounded two in the battle. It did not identify the wanted militia leader or say whether he was still at large. Earlier, police and hospital officials said four people were killed and at least 18 wounded.

The military also said it had raided a mosque in Sadr City looking for a missing US soldier and his kidnappers. The soldier was not found but three suspects were detained.

Residents living near Sadr City said gunfire and air strikes began about 11 p.m. Tuesday and continued for hours. The neighborhood was sealed to outsiders before dawn.

Groups of young men in black fatigues favored by the Mahdi Army were seen driving toward the area to join the fight. Explosions and automatic weapons fire were heard above the noise of US helicopters circling overhead firing flares.

Crowds of Shiite men, some carrying pistols and others hoisting giant posters of al-Sadr, swarmed onto the district's streets Wednesday morning, chanting, "America has insulted us."

Throughout the day and into the night, US F-16 jet fighters growled across the Baghdad sky, and at one point the report of tank cannon fire echoed across the city five times in quick succession.

Streets were empty and shops closed, although the district still had electricity from the national power grid.

Well after nightfall, residents said all roads into the slum remained blocked by U.S. and Iraqi forces. U.S. soldiers were searching all cars.

A frustrated motorist waiting at one checkpoint jumped out of his car and called for al-Maliki to resign.

"Where is al-Maliki? It would be more honorable for him to resign. Why is he letting the Americans do this to us," the driver could be heard to scream.

Falah Hassan Shanshal, a lawmaker from al-Sadr's political bloc, said women and children had been killed, although videotape pictures of the bodies from the neighborhood taken at the local morgue showed only male victims.

"If there was an arrest operation, it should have been carried out by the Iraqi authorities, and not like this where air cover is used as if we were in a war zone," Shanshal said in an interview with the government's al-Iraqiya television station.

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