THE United States transferred sovereignty to an interim Iraqi government two days early yesterday in a surprise move that apparently caught insurgents off guard, averting a feared campaign of attacks to sabotage the move toward self-rule.

US authorities may have handed power to an Iraqi government, but hundreds of Americans will still occupy one of Saddam Hussein’s largest palaces in central Baghdad for several months.

US governor Paul Bremer has left Iraq after the transfer of sovereignty to an interim government was completed today.

Legal documents handing over Iraqi sovereignty were given by US governor Paul Bremer to interim Iraqi Prime Minister Iyad Allawi in a ceremony in the heavily guarded Green Zone.

SADDAM HUSSEIN could face the death penalty, the head of Iraq's war crimes tribunal said yesterday.

Saddam Hussein could face the death penalty, the head of Iraq’s war crimes tribunal said today.

Differences between the Iraqi Governing Council and US authorities over who should be the country’s new president stalled a final agreement on the make-up of an interim government to take power on June 30.

The US governor of Iraq said today that the transfer of sovereignty to Iraqis must go ahead as scheduled despite the killing of the head of the US-appointed Iraqi Governing Council in a suicide bombing.

US aircraft destroyed a Baghdad office of a radical Shiite cleric, killing two people and injuring six, his followers said today.

OSAMA BIN LADEN yesterday offered gold for anyone killing US or UN officials while Iraqi worshippers were told anyone who captures a female British soldier can keep her as a slave.

US ADMINISTRATOR Paul Bremer first heard of allegations that troops were mistreating Iraqi captives at Abu Ghraib prison in January, a spokesman said yesterday.

“Osama bin Laden” has offered rewards in gold for anyone who kills top US, British and United Nations officials in Iraq.

“Osama bin Laden” tonight offered rewards in gold for anyone who kills top US and UN officials in Iraq.

The US army intensified pressure on radical cleric Muqtada al-Sadr today, seizing the governor’s office from his fighters in the holy city of Najaf.

TWO American soldiers were killed yesterday when an explosion levelled part of a Baghdad building they were searching for suspected production of “chemical munitions”.

The new Iraqi army will start recruiting former senior officers from Saddam Hussein’s military and today also lifted a ban on members of Saddam’s disbanded Baath party from teaching in schools.

Iraqi security forces will not be ready to protect the country against insurgents by the June 30 handover of power, the top US administrator said – an assessment aimed at defending the continued heavy presence of US troops even after an Iraqi government takes over.

US troops killed dozens of insurgents near the Syrian border with Iraq after an ambush that left five Marines dead.

BLOODY turmoil reigned in Iraq yesterday, the first anniversary of Saddam Hussein's fall.

SHI'ITE Muslim militants were in full control of two key Iraqi cities yesterday as violence escalated and Sunni fighters killed a US marine in the battle for Fallujah.

Iraq’s interior minister, in charge of security forces, resigned today at the request of top US administrator Paul Bremer to maintain the Shiite-Sunni balance in the government.

A radical Iraqi cleric was branded an “outlaw” today and the US announced a warrant for his arrest, heightening a confrontation after his supporters clashed with coalition troops in battles that killed more than 60 people.

Paul Bremer, the top US administrator in Iraq, has declared radical Shia Muslim cleric Moqtada Sadr an “outlaw” who threatens Iraq’s security.

IRAQ'S US administrator began a 100-day countdown to Iraqi sovereignty yesterday by hailing progress since Saddam Hussein's removal, but fresh violence underlined the country's instability.

With fewer than 100 days until power is handed over to Iraqis, the country’s US administrator today established several Western-style institutions that are expected to put a moderating influence on the fledgling government that takes over June 30.

US Secretary of State Colin Powell, making an unannounced visit to Baghdad for the first anniversary of the Iraq war, told several hundred American soldiers and civilian workers today that America must maintain its fight against anti-democratic forces here “because we cannot let them win”.

Iraq’s constitution was in limbo today after Shi’ite leaders refused to sign it in a last-minute dispute that wrecked a planned ceremony and marred a landmark in US plans to hand over sovereignty.

SHI’ITE members of Iraq’s Governing Council refused to sign the interim constitution at the last minute yesterday, delaying a signing ceremony, after the country’s top cleric rejected parts of the document, Iraqi officials said.

Iraqi politicians agreed early today on an interim constitution with a wide ranging bill of rights and a single chief executive, bridging a gulf between several members over the role of Islam in the future government.

US administrator Paul Bremer says it could take more than 15 months to hold elections in Iraq – a much longer timeframe than the country’s Shi’ite Muslim clergy and some political leaders seem prepared to accept.

Roadside bombs have claimed more US lives in Iraq, killing three US soldiers in separate attacks in Baghdad and Sunni Muslim areas to the north of the capital.

Iraq’s US administrator suggested today he would block any move by Iraqi leaders to make Islamic law the main source of legislation in the interim constitution, a move women’s groups fear would threaten their rights.

American and British officials faced tough questions from UN Secretary General Kofi Annan today about the transfer of power back to the Iraqi people.

United Nations Secretary-General Kofi Annan was meeting coalition and Iraqi officials today, in top-level talks on a role for the UN as Iraq moves towards democracy.

A SUICIDE bomber detonated half a ton of explosives outside the US seat of power in Iraq yesterday, killing at least 20 people in the deadliest attack since the capture of Saddam Hussein.

A suicide driver set off a truck bomb at the gates of the US-led coalition headquarters in Baghdad today, killing at least 20 people and wounding 63 others in the deadliest attack since Saddam Hussein’s capture last month.

A suicide bomber today blew up his vehicle at a main gate to the headquarters compound of the US-led coalition in Baghdad, killing about 20 people in the deadliest attack since the capture of Saddam Hussein last month.

A car bomb exploded outside the main gate to the headquarters of the U.S.-led coalition today, killing 23 people, including two Americans who may have been civilian contractors, U.S. officials said.

Iraq’s US administrator, Paul Bremer has been recalled from Baghdad for brainstorming consultations at the White House and the United Nations, in a scramble to salvage a timetable for Iraqi self-rule.

Iraq’s old bank notes bearing Saddam Hussein’s portrait became obsolete today at the end of a three-month period to exchange them for the new currency.

THE US Army freed scores of Iraqi prisoners yesterday after announcing an amnesty the previous day for low-threat detainees rounded up over the past eight months.

Iraq’s US-led administration will release 506 prisoners from detention camps in a show of good will, while simultaneously offering bounties for 30 more Iraqis wanted in the anti-American insurgency, the top US official in Iraq said today.

Tony Blair today faced a fresh wave of attacks accusing him of deceiving Britain over Saddam Hussein’s weapons arsenal.

In his first hours of captivity, Saddam Hussein appeared to be in good physical condition, but was mentally drained and seemed resigned to his fate, officials who met him say in an interview to be broadcast today.