BAGHDAD, June 20: Iraq said on Sunday it plans to restructure its security forces to battle insurgents across the country and could impose emergency law once the US-led occupation formally ends in 10 days.

Iraqi Prime Minister Iyad Allawi, leading Iraq's interim government-in-waiting, said the nascent army would back police squadrons dedicated to fighting "terrorists" and preventing devastating sabotage attacks on vital oil pipelines.

"The Iraq intervention force will enable us to defeat - anywhere in our country - those forces that oppose democracy and freedom, particularly those who choose to hide behind innocent Iraqis in our towns and cities," Allawi said.

"In these difficult times, substantial elements of the army will have to assist in this effort against external threats to our national security," he told a news conference.

Previous plans had not envisaged the army taking a role in domestic policing, although toppled former president Saddam Hussein had enforced his iron rule through multiple security agencies that brutally crushed internal dissent.

Iraq's government says foreign radicals, bent on undermining a formal transfer of power on June 30, were involved in sabotage that last week brought vital oil exports to a halt and a series of suicide car bombings that killed dozens of Iraqis.

Attacks have increasingly targeted Iraqi police, which have begun to assume responsibility for security before the hand over. Allawi said his government would beef up Iraqi border and coastal police to keep foreign fighters out and use its fledgling air force to watch over pipelines.

Iraq will fashion the existing Iraqi Civil Defence Corps into a national guard dedicated to quelling spiralling violence inside the country and set up a joint operations centre to coordinate national security activities.

"All the Iraqi security forces will be brought to bear against the enemy," said Allawi, who criticized a US decision to dissolve Iraq's previous army in a bid to exclude members of Saddam's Baath Party from power.

Allawi said Iraq's national security committee was considering declaring emergency laws in "some areas" - a move critics say smacks of Saddam's arbitrary rulings and crackdowns.

Allawi, a former Baathist turned CIA-backed exile, defended a US air strike that killed 22 people in Falluja on Saturday. Iraqi officers in the restive town say the dead included women and children, not foreign Islamic militants.

"We know that a house which had been used by terrorists had been hit. We welcome this hit on terrorists," he said. Allawi said the US military had informed the government shortly before carrying out the strike on the house it said was used by aides of Abu Musab al-Zarqawi, a Jordanian described by the Americans as Al Qaeda's leader in Iraq.

He said US forces had captured several foreign fighters, who would be transferred to Iraqi custody once the interim government officially assumes power. -Reuters