Faced with a weeks-long standoff in Anbar province, west of Baghdad, and Iraq's worst protracted unrest since 2008, authorities have been urged by foreign leaders to pursue political reconciliation in a bid to undercut support for militants.

But Prime Minister Nuri al-Maliki has taken a hard line with a view to the looming election, and officials have trumpeted security operations.

Shelling began late on Friday in the south Fallujah neighbourhood of Nazal and continued into the early hours of Saturday, killing eight people, including a young child, and wounding seven, said Doctor Ahmed Shami of the city's main hospital.

Residents of the city on Baghdad's doorstep blame the army for the shelling. Defence officials insist the military is not responsible.

Near Anbar provincial capital Ramadi farther west, security officials said they killed 20 militants in the Albu Faraj area, state television reported.

Fallujah and parts of Ramadi have been in the hands of anti-government fighters for weeks, some of them from the Al-Qaeda-linked Islamic State of Iraq and the Levant (ISIL).

It is the first time militants have exercised such open control in Iraqi cities since the peak of the violence that followed the 2003 US-led invasion.

Fighting erupted in the Ramadi area on December 30, when security forces cleared a year-old Sunni Arab protest camp.

The violence then spread to Fallujah, as militants moved in and seized the city and parts of Ramadi after security forces withdrew.

The government says it is fighting Al-Qaeda while Fallujah residents and tribal sheikhs have said ISIL has tightened its grip on the city. But other militant groups and anti-government tribes have also been involved in battling government forces in Anbar.

The protracted standoff has prompted more than 140,000 people to flee their homes, the UN refugee agency said on Friday, with its spokesman Peter Kessler describing it as the worst displacement in Iraq since the 2006-08 sectarian conflict.

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