BAGHDAD, Iraq – Rebel cleric Muqtada al-Sadr on Wednesday accepted peace terms offered by a delegation from Iraq’s national conference and agreed to withdraw his militia from Najaf, Iraq, offering the best hope yet of an end to his two-week-old confrontation with U.S. forces in Shiite Islam’s holiest city.

An aide later said al-Sadr’s acceptance was conditional on U.S. forces observing a cease-fire, and it wasn’t immediately clear whether al-Sadr, who had refused to meet a delegation from the conference the previous day, was capitulating to mounting pressure or attempting to buy more time.

The apparent climb down came shortly after the interim Iraqi government delivered its toughest warning yet to the rebel cleric and his militia, threatening “in the coming hours” to storm the Imam Ali mosque and shrine compound where they have taken refuge unless they withdrew.

It also coincided with a major push into al-Sadr’s Baghdad stronghold of Sadr City by U.S. forces, who advanced 1½ miles into territory previously controlled by al-Sadr’s black-clad Mahdi Army militia.

During the seven-hour operation, two battalions of the army’s 8th Cavalry task force secured about half the slum of 2 million residents, encountering only sporadic resistance, said Lt. Col. Lopez Carter.

“This is the first time the Mahdi militia has had to fight across the entire width of Sadr City. So it’s got to throw them off balance,” he said.

More than 50 Iraqis who attempted to fire on the advancing tanks and Bradley fighting vehicles were killed in the operation, according to one U.S. officer. There was no independent confirmation of the U.S. estimate. A U.S. soldier was wounded, the military said.

The previous day, a battalion had taken up positions inside the slum in preparation for the latest push, which appeared timed to squeeze al-Sadr in his Baghdad stronghold at a time when political pressure was mounting on him to vacate Najaf.

Earlier Wednesday, Iraq’s interim Defense Minister Hazem al-Shaalan flew to Najaf to deliver a toughly worded ultimatum to al-Sadr and his fighters, who have been battling U.S. Marines and Iraqi forces from within the precincts of the city’s ancient mosque.

U.S. forces have been doing most of the fighting over the past two weeks. But after it became clear any attempt to storm the shrine by Americans would ignite a firestorm of rage, Iraqi officials said Iraqi forces were being trained for any final assault.

“The coming hours will be decisive, and we will teach them a lesson they will never forget,” Shaalan said.

Al-Sadr’s acceptance of the peace terms came several hours later, in the form of a message delivered to the national conference meeting in Baghdad to select a transitional parliament.

Jalil Shamari, a member of a dissident wing of the mainstream Dawa Party, said he had received a phone call from the office of the cleric’s movement in Sadr City telling him that al-Sadr had a message to deliver to the conference.

Shamari said al-Sadr accepted the three-point peace proposal endorsed by the conference.

“Today he has accepted the three points to end Iraqis’ bloodletting and demonstrated his desire to take an active role in the new Iraq,” Shamari said at the conference, to loud applause.

The conditions consist of evacuating the Imam Ali shrine, disarmament of al-Sadr’s Mahdi Army and its transformation into a mainstream political party and a promise not to detain or prosecute al-Sadr or his fighters.

Later, however, a spokesman for al-Sadr in Najaf added a condition to the plan: that U.S. forces must cease fire before al-Sadr agrees to withdraw.

“Muqtada Sadr has sent a message to the national conference in which he accepted all the conditions extended to him, but there must be a cease-fire for the steps to be implemented,” Ahmed al-Shaibany told reporters.

There was no immediate indication that al-Sadr was preparing to withdraw, or that the clashes that have persisted since a truce collapsed last weekend had paused. Journalists in Najaf reported continued exchanges of fire between fighters in the mosque and U.S. tanks deployed around it until late into the evening.

In Washington, the State Department responded cautiously to al-Sadr’s announcement of his intent to withdraw.

“The key here is not what (al-)Sadr’s spokesman says,” a department official said. “It’s what (al-)Sadr actually does that matters, and he has previously said he was going to move out of the shrine and largely disarm his forces and become part of the political process – and that certainly didn’t happen last time.”

The official also said the United States would wait to see whether there is evidence of an actual withdrawal in “in the light of day on the ground in Iraq” before accepting (al-)Sadr’s word. His “track record hasn’t been exactly good in terms of carrying out his commitments,” the official said.

Al-Sadr’s acceptance of the peace plan marked a small victory for Iraq’s first foray into democracy, the national conference meeting in Baghdad that proposed the settlement.

The Najaf confrontation overshadowed the real business of the gathering, which was to choose a transitional parliament to act as a check on the interim government of Prime Minister Ayad Allawi.

After much haggling over procedure that saw the conference stretch into an unscheduled fourth day, the assembly named a slate of 81 candidates for the legislature. An additional 19 slots will be filled by former members of the defunct Governing Council appointed by the U.S. occupation authority.

Most of the 81 are drawn from the main political parties that opposed Saddam Hussein’s regime, including Allawi’s Iraqi National Accord, the Iraqi National Congress of disgraced politician Ahmed Chalabi and the two mainstream Shiite parties, the Supreme Council of the Islamic Revolution in Iraq and the Dawa Party.

The 81 were chosen without a vote after an attempt by smaller parties and independent candidates to challenge the dominance of the major parties collapsed amid complaints that the process lacked transparency.

Elsewhere, the military said a U.S. soldier was killed in northern Baghdad when his patrol came under fire and a U.S. Marine was killed in troubled Anbar province in western Iraq. As of Tuesday, the Pentagon said, 943 U.S. service members have died in Iraq.