Thousands of people who fled Iraq because of sectarian violence, after the fall of Saddam Hussein in 2003, have been returning in recent months. But the U.N. High Commissioner for Refugees says 2.5 million people are still living outside Iraq and two million others are displaced within the country. VOA's Deborah Block spoke to displaced people in a Baghdad neighborhood who say Shi'ite and Sunni fighters have used sectarian differences to drive people from their homes and separate Shi'ites and Sunnis who once lived together.

Residents in the western Baghdad neighborhood of Ghazaliya say Sunnis and Shi'ites got along with each other until extremists, including the Sunni al-Qaida in Iraq and the Shi'ite Mahdi Army, came to the area, launching attacks against coalition forces and exploiting differences between the two Muslim sects.

Last August, radical Shi'ite cleric Moqtada al-Sadr who controls the Mahdi Army, called for a six-month ceasefire, which is to expire later this month. The American military says although the cease-fire has helped reduce violence in Iraq, some members of the Mahdi Army continue to intimidate, kidnap, and kill Iraqi civilians and security forces, including in Ghazaliya.

Less than a year ago, Ghazaliya was so violent that people could not walk down the street. Now, residents say the neighborhood has become much safer because Iraqi volunteers man checkpoints and U.S. troops continue to capture more Sunni and Shi'ite militants.

But the violence by Shi'ite and Sunni militants has resulted in an exchange of populations in areas that were somewhat mixed, making them more religiously homogeneous.

Samir Karim Mohammed, a Sunni, says Mahdi Army militants threatened to kill his family if they did not leave their mainly Shi'ite neighborhood of Shulla, just north of Ghazaliya. After Mohammed's brother, a Sunni sheik, was killed by militants Mohammed moved his family to a Sunni section of Ghazaliya.

He says he lived in Shulla for 37 years and his family shared everything with his Shi'ite neighbors, including weddings and funerals. They visited each others homes. He says his family even prayed at a Shi'ite mosque

Mohammed formerly worked for Saddam's government and says he owned five homes in Shulla and that the Mahdi Army took over four of them. To save his remaining house, he swapped homes with a Shi'ite family.

Ferdos Ali Karam, a Shi'ite math teacher living in Ghazaliya, says she moved a year ago, because al-Qaida in Iraq was threatening Shi'ites in her mainly Sunni area of Ghazaliya. She and her husband exchanged homes with a Sunni family that was living in a Shi'ite part of the neighborhood.

She says insurgents targeted her and her family solely because they are Shi'ite. She says she keeps in touch with her former Sunni neighbors by phone, because she cannot go and see them.

In an abandoned apartment building in Ghazaliya, Shi'ite squatters have moved in, fleeing sectarian violence in other parts of the capital.

At the entrance, water is dripping onto a sewage trench lined with trash. Hamdia Mihawsh, who is Shi'ite, fled her south Baghdad neighborhood of Dora, which is predominantly Sunni. She now lives with her three children in a cramped apartment in Ghazaliya.

She says a year ago her husband went to the market in Dora and she never saw him again. She says a week earlier, an anonymous flyer was left at their house saying her family must leave in 24 hours or they would be killed.

One week after her husband disappeared, she says she found an empty apartment in Ghazaliya and moved in.

Soon after, a man came to her door demanding $1,200 for the yearly rent, which he said he would give to the owner.

U.S. soldiers who patrol Ghazaliya say apartments and homes in Shi'ite areas of the neighborhood, that have been abandoned by Sunnis, are often taken over by Mahdi Army militants who become the unofficial landlords. The soldiers say Shi'ites find these empty dwellings through Mahdi Army contacts. In Sunni sections, al-Qaida extremists frequently take over empty buildings.

With better security in Ghazaliya and other Baghdad neighborhoods, many displaced persons are considering returning to their homes.

"But no one wants to be the first one to move back into their homes. There is a bunch of Shi'ites who want to move back in the Sunni area and vice versa. It is just, "Well, I want to wait until that guy goes and see what happens to him, and if he is OK, then maybe I will move my family, which is a legitimate concern. Some areas are safer than others, but I do not think they are quite ready," said U.S. Army Lieutenant Logan Dick who patrols Ghazaliya.

Many dislocated people in Baghdad complain that the government is doing nothing to help them go back to their homes.

"In some places, the house is occupied by another family, but we have put in a plan to get them to leave in a good way," said Abed Samad Sultan, Iraq's Minister of Displaced Persons and Migration.

He says that means finding another home for displaced families. He admits it will be difficult, because many people are displaced in Baghdad and some homes were damaged or destroyed in the violence. And some families do not have proof of ownership or a rental contract.

As people get pushed from one area to another, the relocation of Sunnis and Shi'ites is changing the face of many Baghdad neighborhoods. But, despite this, Sunnis and Shi'ites say they want to go back to their former neighborhoods, where they hope their children will grow up and live in peace.