The announcement came a day after Iraq's new president Sheikh Ghazi al-Yawar said Sadr could join national politics if he is found innocent of murder charges and agrees to disband his Mehdi Army militia.

"Members of the Mehdi Army who have agreed to make sacrifices ... are asked to return to their regions" of origin, said a brief statement from the cleric published in Najaf.

In a letter made public on May 27, which helped to forge a truce between Sadr's followers and the US military, the young Shia leader said he accepted the principle of sending home those of his men who were not Najaf residents.

Prior to the release of the latest statement, a representative of senior Shia cleric and policitian Mohammad Bahr al-Ulum told AFP that an agreement had been struck overnight on returning Iraqi police to the revered city.

"We arrived at an agreement on deploying police forces to Najaf, which gives the forces of law and order the right to arrest anyone who breaks the law," the representative, Ali Ghrifi, said.

According to Ghrifi, the deal was made at a meeting of representatives of the "Shiite house", which groups the leaders of Iraq's majority Shia population and has been closely involved in mediating between Sadr and the US army.