U.S. lawmakers Tuesday grilled the top U.S. general in Iraq amid fierce fighting on the ground as Shiite radical leader Moqtada al-Sadr cancelled a massive anti-U.S. demonstration set for Wednesday.
Sadr also threatened to end the truce agreed in August which helped lead to a sharp drop in violence in Iraq in the second half of last year.
Sadr's threat hung over the key hearing in the U.S. Congress, as General David Petraeus urged the troop withdrawals to be frozen for at least 45 days after July to allow military commanders to review security in the ground.
As fighting between Sadr's Mahdi Army militia and U.S. and Iraqi forces raged for a third day, the radical leader also cancelled a massive anti-U.S. demonstration set for Baghdad for Wednesday, the fifth anniversary of the toppling of late dictator Saddam Hussein.
"The Jaish al-Mahdi (Mahdi Army) is hand in hand with the Iraqi people to achieve security, stability and liberation. If it is of interest to lift the ceasefire to achieve the aims and goals, it will be announced in a separate statement," Sadr said in a communique.
Sadr's threat to end the eight-month-old truce came after Iraqi Prime Minister Nouri al-Maliki ordered a major crackdown on militias in southern Basra sparking deadly clashes between the Mahdi Army and government troops.
Iraqi and U.S. forces have clashed with Sadr's militia in Baghdad and Basra since Maliki ordered a crackdown on the Shiite militiamen in the southern city on March 25.
The fighting died down after Sadr called his fighters off the streets on March 30, but continued sporadically in Basra and Baghdad before erupting again in the militia's Baghdad stronghold of Sadr City on Sunday.
Petraeus, who was accompanied by the U.S. Ambassador to Baghdad, Ryan Crocker, told the Senate Armed Services Tuesday that the Iraqi government offensive was "not adequately planned and prepared."
And he accused Iran of meddling in Iraq saying the upsurge in violence "highlighted the destructive role Iran has played in funding, training, arming and directing the so-called special groups."
Tuesday and Wednesday's Congress testimony will shape the coming months of Iraq policy, and U.S. President George W. Bush was to address the nation on Thursday.
The U.S. military is currently withdrawing five combat brigades sent into Iraq early last year -- to be completed by July. That would bring troop levels down from about 158,000 to 140,000.
A freeze in bringing U.S. troops home is likely to be unpopular in the U.S., which has seen more than 4,000 soldiers killed in the conflict, now stretching into its sixth year.
The number of Iraqis killed in March climbed to 1,082, most of them civilians, the highest monthly figure reported by government ministries since August, confirming a resurgence in violence in recent months.