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Fighting in Baquba began early yesterday when fighters armed with assault rifles and rocket-propelled grenades attacked a patrol of soldiers from the US 1st Infantry Division near a police station. The soldiers then came under fire from a nearby mosque.

Iraqi forces stormed the mosque and found rocket-propelled grenades, mortars and other weapons. US troops then called in air strikes and two 500lb bombs were dropped on "anti-Iraqi forces' positions", the military said.

Officials at the main police station in Baquba said 26 insurgents and five Iraqi police had been killed in the fighting.

One Iraqi policeman and seven civilians died, a hospital official said. Four American soldiers were injured.

In Buhriz at the same time, an attack on a police station killed the town's police chief.

In Falluja, US troops continued to fight insurgents in southern districts of the city where they claim to have killed 1,200 rebels in the past week. There were heavy bombing raids and artillery fire directed at the south of the city, with aircraft making up to 30 bombing runs.

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Further north, in Mosul, which has seen serious violence in the past week, five American soldiers were injured when a suicide bomber detonated his car near a US military convoy. "I expect the next few days will bring some hard fighting," the US commander in the city, Brigadier General Carter Ham, said.

In Suwayra, south of Baghdad, two policemen and five National Guardsmen were killed. There was heavy fighting in Ramadi, to the west of Falluja, where two car bombs detonated near US convoys.

In a new audiotape on an Islamist website, Jordanian terror mastermind Abu Musab al-Zarqawi said the Americans were avoiding attacks against some rebel strongholds while fighting in Falluja.

"The enemy is now avoiding fighting you for fear of dispersion and attrition," he said. "It has massed its capabilities ... to finish off Islam in Falluja. If it finishes Falluja, it will move in your direction."

The speaker said the Americans were overextended and "cannot expand" their operations. "Shower them with rockets and mortars and cut all the supply routes," he said.

· The Hungarian parliament yesterday rejected a government proposal to extend the stay of 300 non-combat troops in Iraq by three months until March 31 next year.

http://www.guardian.co.uk/Iraq/Story/0,2763,1352295,00.html