'We have not found any trace of an armed group there,' said Mohammed Abdulkarim after the strike on the Jbail neighbourhood. 'The raid hit the house of a man named Jassem Mohammed Fayyad, killing several members of his family and his neighbours,' he said.

The US military acknowledged 19 people were killed in the raid but maintained that it was a precision strike on a known safe house used by supporters of suspected Al-Qaeda leader Abu Mussab Zarqawi.

Local residents denied all knowledge of Zarqawi's group. 'There are no foreigners in Fallujah, either civilians or militants,' said Ali Mohammad Abed, who lives in the Jbail district.

Iraqi prime minister Iyad Allawi defended the strike and claimed the US military had informed the government before carrying out the operation. 'We know that a house used by terrorists had been hit,' he told a news conference. 'We welcome this hit on terrorists anywhere in Iraq.'

Meanwhile, Shia leader Moqtada Al-Sadr has been invited to the political conference in July where a national council to advise Iraq's interim government will be selected, an Iraqi official confirmed on 20 June. 'Moqtada Sadr has begun to transform his militia into a political organisation, which is considered a positive step and his movement has roots in the country,' Fuad Maasum, head of the conference preparation committee, said. Up to 1,000 representatives of political movements, tribes and regions from across Iraq will attend the conference to select the country's 100-member interim national council.

Separately, a video tape was shown on Al Jazeera television on 20 June in which militants threatened to behead a South Korean hostage in 24 hours unless Seoul abandons plans to send more troops to Iraq.

The prisoner, Kim Song-Il, appears with masked armed men, who said they belonged to the Unification and Jihad group, led by Zarqawi. 'Do not send any more troops to Iraq or we will send you the head of this Korean and it will be followed, God willing, by the heads of your soldiers,' said one of the men in Arabic.

The Korean defence ministry said on 18 June that 3,000 more South Korean troops will be sent to northern Iraq.

It has been announced that Iraq will take legal custody of Saddam Hussein and nine other high-profile prisoners soon after the country gains sovereignty on 30 June, but US-led jailers will continue to guard them, a coalition official said on 20 June.

'The plan now is to transfer approximately 10 high-profile, high-value detainees, to the Iraqi interim government as soon as they request them, which will probably be very shortly after July 1,' a senior official said. Asked whether Saddam would be among the 10, he said: 'Yes, yes he will be.'

US-led forces, who will stay in Iraq after the handover, will still guard the former head of state.

Iraqi Prime Minister Iyad Allawi announced a dramatic overhaul of the country's defence structure on 20 June, vowing to deploy all security forces, including the army, in the fight against insurgents. Allawi said a new command and control structure would streamline the country's defenses to battle unrest. He said top defense officials and the Interior Ministry would report directly to him, and announced the formation of an elite military unit and special forces. Allawi told a news conference that the Iraqi Civil Defence Corps would be renamed the Iraqi National Guard and would come under the command of the army.