Two U.S. officials have joined members of Iraq's Governing Council in trying to mediate an end to the violence that has killed dozens of U.S. troops and hundreds of Iraqis over the past two weeks in the city of Fallujah.
The U.S. military representative to the talks said "time is limited" and the coalition cannot allow the situation to continue as it is. U.S. commanders have said they will consider further military action in Fallujah if diplomatic efforts fail.
Officials say the talks will continue in Fallujah on Saturday.
Meanwhile, a special Iranian delegation was due in the southern city of Najaf, where Iran's Foreign Ministry says they are looking for "a solution to end the Iraq crisis."
It was not clear whether the Iranians would meet with radical Iraqi Shi'ite cleric Moqtada al-Sadr, who has been trying to incite a Shi'ite rebellion against coalition forces in central and southern Iraq. The cleric is believed to be in Najaf, protected by his armed supporters.
A U.S. coalition official said earlier that the United States does not believe Iran has a role to play as a mediator. He said the issue of Moqtada al-Sadr should be resolved by the Iraqis.
In a separate development, the U.S. military says eight Iraqi civilians were killed by mortar attacks in the northern city of Mosul Thursday night. Fifteen Iraqis and two coalition soldiers were also wounded.