US marines pressing an offensive in this Iraqi town west of Baghdad bombed a mosque in the center of the town Wednesday and killed up to 40 insurgents inside, a marine officer said.
The attack came from a jet aircraft at a high angle to minimize the impact, the officer said.
"We wanted to kill the people inside," said Lieutenant Colonel Brennan Byrne.
US marines battled Sunni insurgents west of Baghdad after suffering 12 dead in a nearby town and killing 24 Iraqis here while city mosques called for a holy war against occupation forces.
Eleven Marines died during an engagement with anti-US insurgents of more than seven hours in the nearby town of Ramadi Tuesday, while another later died from wounds suffered during the firefight, a marine statement said.
It was the highest single-day casualty toll suffered by US forces since the beginning of the year.
Hospital sources here, meanwhile, said a total of 46 Iraqis had been killed and dozens wounded in Fallujah in clashes between US forces and anti-coalition insurgents since late Tuesday.
The sources said the Iraqi casualties were "mostly women and children" and that their makeshift hospital could not receive any more casualties.
"We are treating the wounded and then asking them to leave," a doctor said.
Meanwhile, all the city mosques were calling for a "jihad" (holy war) against US-led occupation forces amid intense bombardments and aircraft overflights.
The insurgents claimed in a communique to have shot down three US helicopters, destroyed two jeeps and two armored vehicles.
They also claimed they were still in control of the city and had put US forces to flight.
As US forces pressed "Operation Vigilant Resolve" for a third day to flush out insurgents who killed four American contractors here last week, a marine officer said the rebels were using mosques to fire on marines and to hide weapons.
At 10:15 am (0615 GMT), 200 marines were engaged in a major firefight with the rebels around a Fallujah mosque.
Heavy rocket and machine-gun fire could be heard while black smoke billowed into the air as marines took cover behind abandoned metal shops and debris in the streets.
"I think this is worst than the first one (the war last year)," said Richard Savick, a veteran of the Gulf War.
The operation involves two marine battalions, or more than 2,000 troops, based near this Sunni Muslim stronghold that has been a bastion of anti-US insurgency since the ouster of Saddam Hussein's Sunni-dominated regime a year ago.
Marines were using aggressive tactics to draw out the insurgents and then chase them.
The US-led coalition's deputy operations chief, Brigadier General Mark Kimmitt, told a press conference in Baghdad that US forces had taken "form positions within the city."
The 12 deaths in Ramadi brought to 628 the number of US soldiers killed in action in Iraq since the US-led coalition invaded the country in March 2003 to oust president Saddam Hussein's regime, according to an AFP toll.
Tuesday night, marines picked up a man identified as "Khalil the rocket man", who is wanted for selling rockets.
"The order for his arrest came from high up," the officer said, indicating that the suspect was on a list of individuals the marines were hoping to capture in their operation.
The suspect was arrested along with four other people during a search of his home but nothing was found, the officer added.
Meanwhile, marines were handing out posters showing pictures of six men who were at the scene of the murder of the contractors with the sign "Wanted" written in large Arabic script.
"If you see these people, call this number," said the posters which show one of the suspects holding a sign saying "Fallujah will be the cemetery of the Americans."
All day Tuesday, the sounds of exploding mortar rounds and of machine-gun fire shook the city as the insurgents ran in packs of four or five, appearing out of alleys and on roof tops, spraying bullets and shooting off rocket-propelled grenades (RPGs).
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