US military 'seals off Falluja'
Marines have been preparing for an assault on the city
The US military has sealed off the rebel-held Iraqi city of Falluja amid speculation an assault is imminent.
All roads in and out of the mainly Sunni Muslim city have been closed by US troops, Reuters reports.
US and Iraqi officials say they need to flush out insurgents ahead of elections due in January.
Speaking in Brussels, Iraq's interim Prime Minister Iyad Allawi said the window was closing for a peaceful settlement in Falluja.
"We intend to liberate the people and bring the rule of law," he told a news conference at a European Union summit.
"The insurgents and the terrorists are still operating there. We hope they will come to their senses, otherwise we will have to bring them to face justice."
The BBC 's Paul Wood, who is with US troops outside Falluja, says Iraqi troops have now arrived at their positions, and final preparations appear to be taking place.
He says units are stocking up with large quantities of artillery shells, and the pace of training has increased.
"We are making last preparations. It will be soon. We are just awaiting orders from Prime Minister Allawi," Marine Col Michael Shupp told Reuters near Falluja.
Mr Allawi has repeatedly threatened an all-out assault on Falluja if residents do not turn in Jordanian militant Abu Musab al-Zarqawi, who is thought to be based there.
His al-Qaeda-linked group has captured and killed hostages and is blamed for a string of suicide bombings.
Weeks of air strikes
US military said it had carried out five air strikes within seven hours on Friday, destroying a command post, arms caches and rebel positions, Reuters reports.
Our correspondent says there is an assumption among the marines that a major assault is inevitable and imminent.
US and Iraqi officials say there are several thousand fighters holed up in the city, 50km (30 miles) west of Baghdad.
The Iraqi authorities say the fighters are highly organised and led by former army officers from Saddam Hussein's army.
The combat hospital at the main US base near Falluja has set up a morgue and doubled medical staff and supplies in preparation for an expected stream of casualties, AP reports.
The US has carried out weeks of "precision strikes" aimed at targeting Zarqawi's fighters and other militant groups in the city.
In other developments:
Iraqi Vice-President Ibrahim al-Jaafari says the election date has been set for 27 January. Mr Allawi later tells reporters in Brussels that no date has been set, although elections will take place by the end of January.
Two children are killed in Muqdadiya, north-east of Baghdad, when a mortar shell intended for a nearby police station hits their home
Three hostages, two from Lebanon and one from Nepal, are released.
