A three-day conference to choose an Iraqi National Council was extended for an additional day Tuesday. The move came as efforts were stepped up to end the clashes between U.S.-led forces and followers of a radical Muslim cleric holed up in Najaf.

The conference decision to continue their deliberations for another day came against a backdrop of fierce fighting in Najaf between U.S. troops and forces loyal to Moqtada al-Sadr.

The streets of Najaf's Old City echoed to the sound of the gunfire and rockets as the al-Sadr loyalists, the self-proclaimed Mahdi Army, put up stubborn resistance. U.S. forces lobbed a computer-guided missile into the huge central cemetery, a spot from where, U.S. military officials say, Mahdi Army forces were attacking American soldiers. At least three people were killed and 15 others wounded in the fighting Tuesday.

Moqtada al-Sadr's militia is holed up inside the Imam Ali Shrine, one of the most revered spots in Shia Islam. Their presence in the shrine presents a dilemma for U.S. forces, who are extremely reluctant to attack such a holy place. Torn by the fighting in Najaf, the conference dispatched an eight-man delegation to the city Tuesday to try to persuade Moqtada al-Sadr to abandon his armed resistance and join the political process.

Hussein al-Sadr, head of the delegation and a relative of Shi'ite militia leader, said the delegation was not going to Najaf to negotiate, but to carry the appeal of the conference meeting in Baghdad.

The delegation delivered a peace proposal to aides of Moqtada al-Sadr after the radical Shi'ite cleric refused to meet with them in the holy city of Najaf, where fighting continued Tuesday.

The cleric's followers said what they described as "aggression" by U.S. troops forced him to stay away from the talks with religious and political leaders. The delegation reportedly waited three hours to meet with him.

The delegation offered the cleric's fighters amnesty in exchange for their disarming, vacating holy sites, and joining the political process. The Baghdad conference is to choose a 100-member National Council to oversee the work of the interim government until scheduled elections in January.

United Nations adviser Ibrahim Nawar, who helped organize the conference, said the credibility of Iraq's embryonic political process is at stake in securing an end to the fighting in Najaf.

"You cannot ignore it," he said. "If you have a situation like that in one part of the country, and this is the national conference. It has a responsibility.

"So it has to move and do something," continued Mr. Nawar. "And it is down to these people, the delegates, not to achieve victory for themselves, but to try to prove that this body is credible, and can achieve something, and can be trusted [by] the Iraqis."

The fighting in Najaf has been going on since August 5, with the exception of a brief cease-fire. The threat of attacks has disrupted Iraq's exports of crude oil. A mortar round struck a busy street in Baghdad several kilometers from where the conference was meeting Tuesday, killing seven people and wounding nearly 50 others.

Fighting was also reported in the southern city of Basra Tuesday. It is not clear if it was British forces or civilian contractors who came under attack by Shi'ite militiamen.