BAQUBA, - U.S. soldiers tightened their cordon around al Qaeda fighters holed up in the Iraqi city of Baquba on Saturday, advancing carefully through streets lined with roadside bombs and booby-trapped houses.

"We are enveloping the enemy into a kill sack," said Command Sergeant Major Jeff Huggins from the 5th Battalion, 20th Infantry Regiment, 3rd Stryker Brigade.

Around 10,000 American and Iraqi soldiers are into the fifth day of a major push against al Qaeda militants in Diyala province just north of Baghdad.

U.S. troops have killed dozens of suspected al Qaeda fighters. One U.S. soldier has been killed.

Much of the focus is on Baquba, an al Qaeda stronghold that has become a sanctuary for militants escaping a four-month-old security crackdown in the capital.

Major Doug Baker, also from the 5th Battalion, said he had cleared three-quarters of the neighbourhood he was assigned to. But around 100 al Qaeda fighters were hunkered down in the northwest corner of the Khatoon district in west Baquba.

"That is where we are expecting the stiffest resistance," said Baker, speaking late on Friday at a military base.

The Diyala campaign, dubbed Operation Arrowhead Ripper, is part of a broader offensive involving tens of thousands of U.S. and Iraqi soldiers pushing on with simultaneous operations in Baghdad and to the south and west of the capital.

A major focus of the operations is al Qaeda's car bomb networks. U.S. officials accuse the Sunni Islamist group of using car bombs and assassinations against Shi'ite targets in an attempt to spark full-scale sectarian civil war.

Some residents in Baquba have complained there has been no water or electricity since Operation Arrowhead Ripper began.

Baker said the incursion had lifted a strict regime where smoking was banned and fruit was not allowed to be placed next to vegetables in the market.

Soldiers had also found a house that appeared to have been set up as an al Qaeda court, with a room divided by a curtain. Behind this was a large chair from which judgment was apparently delivered.

Hardline insurgents have been trying to establish a Taliban-style rule in Diyala for months, forcing young schoolgirls to wear veils and attacking restaurants and Internet cafes deemed "un-Islamic".