Jubilant Iraqi soldiers chanted slogans and waved their rifles before a mural of Iran's Ayatollah Ruhollah Khomeini to celebrate the recapture of this shell-blasted town at Iraq's southern tip.

Faw lay battered and virtually unpopulated around them, its walls still marked with murals of Iranian leaders and slogans in Iran's Farsi tongue.But Iraq's seizure this week of the dusty, windswept town, two years after Iran captured it, was probably Iraq's most important offensive victory since the war began in September 1980.

By the time reporters visited Wednesday evening, Iraqi forces who had stormed the desolate battleground on Sunday appeared to have driven Iranian troops back across the Shatt al-Arab waterway that divides the warring nations.

Soldiers in green Iraqi uniforms made tea at a leisurely pace in front of former Iranian bunkers 100 yards from the Shatt on the edge of Faw.

In the distance, Iraqi gunners periodically fired shells across the broad river, and Iranians answered with occasional shelling of their own.

Nearly every building in the town was partly crumbled by shelling, and giant oil storage tanks nearby were melted and twisted by fire.

Although Iran reportedly once had 50,000 soldiers in the Faw region, controlling the southern 8 to 12 miles of the peninsula, reporters on Wednesday saw no Iranian bodies and only moderate numbers of freshly destroyed weaponry.

The sides of roads leading from Faw to Basra were littered with twisted tanks and mangled trucks. Much of the wreckage, however, was rusted or half buried by the choking dust, remnants of the massive 1986 battles.

Iraqi officials provided no briefing on the battle or the casualties suffered by the two sides. Iraq previously has said that thousands of Iranians were killed or wounded in the battle.

The battlefield itself was a vast and flat drained marshland, churned and diked by defense works ranging from foxholes to massive earthen barriers.