"Significant numbers of enemy fighters (up to 100) are estimated to have been killed," the statement read.

"We are responding after being under fire. We are hitting enemy positions in the city since 6:30 pm (1430 GMT). We are using aircraft and artillery fire," said US Marine spokesman Lieutenant Colonel T.V. Johnson.

Aircraft and artillery pounded the southern Shuhada district and industrial zone of Fallujah, an AFP correspondent witnessed.

Smoke mushroomed into the sky. War planes strafed the industrial zone The general hospital had received a undetermined number of casualties and panic swept the city, the reporter added.

One ambulance driver said he had taken two dead and 15 wounded to hospital, while families fleeing the air raids said there were more corpses and wounded trapped in the zone under attack.

Mosque loud speakers wailed "God is Great" amid the cacophony.

"Structures used as fighting positions by anti-Iraqi forces were repeatedly struck by defensive counter-fires. Many of these buildings erupted in secondary explosions that are characteristic of hits on weapons/ammunition caches," the military said.

Fallujah, which lies 50 kilomtres (30 miles) west of Baghdad, is a bastion of the Sunni Muslim insurgency against US-led forces in Iraq. A US air strike on a suspected militant safehouse in the city killed 20 people one week ago.

Residents of Fallujah have often countered US claims that rebels were being attacked, saying that those coming under fire were ordinary Iraqi civilians.

Seven US marines and three Iraqi national guardsmen were killed in a car bombing near Fallujah Monday, the worst single strike against the US military in months.

The US military has resorted to artillery and aerial assaults on alleged insurgent hideouts in Fallujah since the city became a no-go zone for troops after an April offensive ended with an agreement for Iraqis to police themselves.

Within weeks, Islamic militants imposed full control over Fallujah, elbowing aside the local police and an ad-hoc force of Iraqi army veterans, named the Fallujah Brigade, was formed to restore security.

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