Refugees and resistance fighters say government troops have recaptured every major city in southern Iraq, and Kurdish rebels report high casualties from raids by helicopter gunships in the oil center of Kirkuk.

The U.S. State Department said Monday its intelligence supported reports that Iraqi troops have made gains in the south and appear to be in control of Kirkuk and the other main northern city, Mosul.But Kurdish leaders maintained Kirkuk was under their control.

Iraq's U.N. ambassador on Monday accused neighboring Iran of sending military units across the border and firing on Iraqi soldiers in support of rebel groups infiltrating from Iran. Tehran denied the accusations.

Resistance fighters and refugees, fleeing Monday to Safwan and other U.S. military outposts, said the mainly Shiite Muslim rebels in the south have lost all the larger cities and towns they controlled as recently as March 15.

They said Saddam Hussein's loyalists have used tanks, helicopters and heavy artillery to crush the southern uprising.

Bush administration officials were quoted Tuesday as saying the continued helicopter gunship attacks - in defiance of a U.S. warning to Iraq against the use of aircraft - were a key instrument in recapturing rebel strongholds.

The report in The New York Times said the administration was debating whether to become more involved in protecting the rebels.

Iraq's use of aircraft in battling the rebels would violate the terms of a temporary cease-fire that went into effect last month. The U.S. Air Force shot down two Iraqi warplanes last week for violating the ban.

U.S. military officials in the Saudi capital of Riyadh said Tuesday that the the United States has allowed Iraq to ferry its troops by helicopter. They said they could not confirm the reports of recent Iraqi helicopter gunship attacks.

In other developments:

- American workers plugged the first of hundreds of damaged Kuwaiti oil wells inside Kuwait Tuesday, ramming mud 4,000 feet into the earth to "kill" a well that had been spewing 15,000 barrels of crude a day.

In an operation that the American well-cappers described as "the easiest one of the bunch," workers connected a pipe to an oil well head and forced 250 barrels of mud down the spewing well for about 30 minutes.

After a few belchs of compressed gas and a final squirt of oil, mud spewed from the head, signaling that all the oil had been flushed from the well.

"One down, 799 to go," said Joe Bowden, head of Wild Well Control Co. of Spring, Texas, which handled the job.

- Saudi Arabia and Iran formally resumed ties after a three-year split, further isolating Saddam's government and dramatizing Tehran's effort to return to the international fold.

- A Kurdish rebel leader returned to a tumultuous welcome Tuesday in his people's historic homeland of Zakho, Iraq, and told thousands of cheering guerrillas their fight would go on until "the whole of Iraq is liberated."

Tears glistening in his eyes, Jalal Talabani waved to the crowd from a balcony and congratulated the Kurdish guerrillas for victories over troops from the "the bloody dictatorship of Baghdad."