KARBALA, Iraq — U.S. soldiers backed by tanks and helicopters battled fighters loyal to a radical cleric near a mosque in this holy city Wednesday, hours after Iraqi leaders agreed on a proposal that would end his standoff with the U.S.-led forces. As many as 25 insurgents were killed, the coalition said.

The cleric, Muqtada al-Sadr, urged fighters in Karbala to resist U.S. troops, comparing their struggle to the Vietnam War.

Half of the Mukhaiyam mosque, which had served as a base for al-Sadr's followers, was destroyed and seven hotels were ablaze after tanks opened fire and jets bombed the area. Most of the shops in Tal al-Zeinabiya, a central market, and three ambulances and two military vehicles also were destroyed.

American troops and al-Sadr's followers also fought overnight on the outskirts of the southern holy cities of Kufa and Najaf, and residents heard large explosions. One Iraqi was killed and four were wounded in Kufa, and four Iraqis were wounded in Najaf, hospital officials said.

"I appeal to the fighters and mujahedeen in Karbala to stand together so as none of our holy sites and cities are defiled," al-Sadr said, speaking at a shrine in Najaf, where he is holed up. "We are prepared for any American escalation and we expect one."

Asked how long his forces can fight, al-Sadr said: "Let remind you of Vietnam. We are an Iraqi people that has faith in God, and his prophet and his family. The means of victory that are available to us are much more than what the Vietnamese had. And, God willing, we shall be victorious."

It was the first time al-Sadr had appeared before reporters since his militia, Al-Mahdi Army, launched attacks on coalition troops in Baghdad and several other cities in early April. He said American forces were fighting Islam, and not terrorism in Iraq, and he referred to the abuse of Iraqi detainees by U.S. troops at Saddam Hussein's notorious Abu Ghraib prison.

"Look at what they have done. Look what the torture they have committed against our detainees. Could anyone who came to rid us of Saddam do this?" al-Sadr said in what was described as an open letter to the American people.

The new U.S.-appointed governor of Najaf, Adnan al-Zurufi, said Wednesday he believed his American backers will give another week to efforts to find a peaceful end to the standoff in Najaf before resolving it by force.

"If you assess U.S. military movements in terms of territorial gains, then U.S. forces a week from now will enter certain areas of the city that will in turn make the prospect of a peaceful settlement very weak," al-Zurufi said.