"There is a resistance network and it is stronger than we originally thought," one administration source said, speaking on condition of anonymity.

"Saddam is moving around inside Iraq and he's got a lot of support," another US government official said.

He added: "A lot of what is being reported in the press as 'looting' is in fact sabotage by Baath party stay-behind groups."

The underground Baath resistance is made up of former party officials who are funded with money looted from the Iraqi treasury, this source said.

"There is credible evidence that Saddam is still alive and being sheltered," said former CIA chief Vince Cannistraro.

A CIA spokesman did not respond to requests for comment.

Angelo Codevilla, former senior member of the Senate intelligence committee and now a Middle East expert at Boston University, said that the millions in $100 bills looted just before the start of the war "indicated that Saddam had long planned to simply go underground. It was not a hasty decision".

Administration officials said US forces in Iraq are conducting searches for Saddam in greater Baghdad and in "a small town" just north of the city.

According to US intelligence officials, Saddam and his entourage simply move in with a private family. Members of the family, including children, are taken as hostages so that no other family member will be tempted to inform on Saddam's whereabouts.