BAGHDAD, Oct 31: Iraq was on the brink of an all-out assault on rebel-held Fallujah on Sunday as deadly clashes erupted between US troops and insurgents in the neighbouring city of Ramadi.

Japan, meanwhile, vowed that its troops would stand firm in Iraq after Islamic militants demanding a pullout killed a 24-year-old Japanese tourist, and Poland rejected a similar desperate plea made by a kidnapped Polish woman.

"We have entered the final phase to solve the Fallujah problem," Prime Minister Iyad Allawi told a news conference in Baghdad.

"If we cannot solve it peacefully, I have no choice but to take military action. I will do so with a heavy heart."

Allawi said he met on Saturday night with religious and tribal leaders from the Sunni Muslim insurgency bastions of Fallujah and Ramadi, west of Baghdad, and the northern city of Mosul and that they all wanted the government to assert its authority in these hotspots.

The prime minister laid out conditions of exit of foreign fighters and insurgents, the handover of heavy and medium-sized weapons and allowing the government to begin reconstruction in these cities.

At least 10 Iraqis were killed and 15 people wounded, including three marines, when fighting erupted between rebels and US troops in Ramadi.-AFP