NAJAF, Aug 20: Militiamen holed up in Najaf handed over the keys of their stronghold to aides of Iraq's top Shia leader on Friday but denied they had capitulated in their 16-day stand off with US-backed security forces.

The hand over of the keys to representatives of Grand Ayatollah Ali al Sistani appeared to provide a face-saving way out of the crisis for militia leader Moqtada Sadr after his supporters earlier scoffed at government claims he had surrendered control of the Imam Ali Mosque to police.

"The keys were handed to the office (in Najaf)," Ayatollah Sistani's spokesman Sayed Murtdha al Kashmiri said in London, where the scholar has been receiving medical treatment.

In Najaf, Moqtada Sadr's spokesman Sheikh Ahmed al Shabani confirmed the hand over. "The process of handing over the shrine has been completed," he said. "But there is some technical process that is going on, like estimating the value of assets of the shrine, which includes gold, money and furniture."

Asked if the militiamen would now leave the mosque compound, he said: "We are staying in the shrine as pilgrims, but if we are asked to lock the shrine, we would vacate it." Sadr has repeatedly balked at demands from Iraq's US-backed caretaker government that he hand control of the mosque compound to a police force he regards as a US tool.

Ayatollah Sistani, on the other hand, still commands enormous respect among Shias across the political spectrum despite a reputation for moderation that has won plaudits from the occupation forces.

The symbolic hand over came after a day of confusion in which Iraqi government officials had insisted against all evidence on the ground that police had entered the mosque compound and detained several hundred militiamen.

An eyewitness in the shrine said he had not seen a single policeman. On the contrary, he said fighting continued sporadically on the southern side of the old city between the militiamen and US-backed forces that have surrounded the shrine compound.

In Washington, a US defence official also rejected the claims of Iraqi spokesmen. "Not a lick of truth to it," he said. "We are still outside of the shrine, and so are the Iraqi police." It was unclear why government officials in Baghdad had so wildly overstated the situation on the ground. -AFP