Up to 13 people have been killed and 15 wounded in pre-dawn clashes between Shia militants and US soldiers in Baghdad.
It is understood US helicopters fired on militants in the Shuala area.
Shuala is one of the main strongholds of radical cleric Moqtada al-Sadr's Mehdi Army.
Yesterday in Washington, an intelligence report cast doubt on the Iraqi Prime Minister's leadership while an influential senator in the Republican Party urged the US President to begin a troop pullout.
US intelligence agencies have doubted Nuri al-Maliki's ability to heal sectarian divides, one of the benchmarks the US uses to measure progress in Iraq.
Senator John Warner said Mr Maliki's had 'let our troops down' by failing to take steps toward political reconciliation that would help stabilize Iraq.
He said George W Bush should announce next month an initial withdrawal of US troops as a way to spur the Iraqi government into action.
Mr Warner, a senior Republican on the Senate Armed Services Committee who has pushed Mr Bush to change his Iraq policy, suggested a withdrawal of 5,000 troops who could be home by Christmas.
There are about 160,000 US troops in Iraq at present.
Mr Warner said that Mr Bush should announce the withdrawal of the troops on 15 September when the progress report on Iraq is delivered to Congress.
