Iraq claimed its troops recaptured the northern oil city of Kirkuk, but Kurdish rebels denied it Friday and said heavy fighting still raged in and around the city.

Baghdad's state-owned Iraqi News Agency reported late Thursday that troops loyal to President Saddam Hussein recaptured Kirkuk and "cleansed it of agents backed by enemy regimes."The news agency said live footage on state television showed the streets of Kirkuk "after Iraqi forces expelled the criminal traitors" and that Revolutionary Command Council member Izzat Ibrahim was shown in the city.

Hoshyar Zebari, a spokesman in Europe for the Kurdistan Front, said the government claim "was absolutely not true" and that the footage shown was old.

He said the Iraqi loyalist troops Thursday "made an advance with four to five divisions" after subjecting the city "to massive bombardment by aircraft, helicopters, artillery, tanks and even missiles."

"Our forces engaged them in very tough and fierce fighting" and till late Thursday the loyalist troops "were on the outskirts of Kirkuk," he said. Earlier, INA said loyalists retook Dohuk, north of Mosul, but "Western reporters were there at the time," he said.

The Kurdistan Front spokesman said it is not Kurdish Peshmerga guerrilla strategy to hold big cities and if Iraq recaptured Kirkuk "it would not be a disaster for us."

Rebel strategy is "to engage them and wear them down," he said, suggesting the government troops were encouraged to advance and expose themselves to rebel fire.

In southern Iraq, Tehran radio quoted Iraqi opposition sources as saying clashes continued between loyalist troops and Shiite rebels.

The Bush administration reaffirmed Friday its decision not to intervene in Iraq's internal strife, preferring instead to use diplomacy and the United Nations to isolate Saddam.

Deputy press secretary Roman Popadiuk said it is "up to the Iraqi people to decide their future."