BAGHDAD, Iraq (AP) – Iraq’s interim prime minister on Sunday warned that efforts to resolve the standoff in Fallujah peacefully have entered their “final phase” and said he will not hesitate to launch “a military solution” to end Sunni insurgents’ hold over the city.

In another city of Iraq’s stormy Sunni Triangle, a rocket slammed into the Sunubar Hotel in Tikrit late Sunday, killing 15 Iraqis and wounding eight others, hospital officials said. Insurgents may have been aiming at an American position, which was targeted by a second rocket. U.S. officials said no American casualties were reported.

Prime Minister Ayad Allawi’s warning, delivered in a nationally televised news conference, occurred as U.S. forces prepare for a showdown with thousands of militants holed up in Fallujah – the city that has become the focal point of armed resistance to the Americans and their Iraqi allies.

Allawi appeared to be aiming to prepare the Iraqi public for an onslaught likely to unleash strong passions, especially among the country’s Sunni Muslim minority.

He warned of civilian casualties, saying that if he orders an assault it would be with a “heavy heart,” because “there will be some loss of innocent lives.”

“But I owe, owe it to the Iraqi people to defend them from the violence and the terrorists and insurgents,” he said.

U.S. and Iraqi commanders want to put down guerrillas before vital elections due to be held by Jan. 31, which Allawi insisted will take place as scheduled. On Sunday, insurgents in Fallujah fired mortar rounds and rockets at U.S. Marines, who responded with artillery. U.S. aircraft also struck suspected rebel positions, Marine officials said.

Clashes were also reported between U.S. forces and insurgents in Ramadi, west of Fallujah, killing seven Iraqis and injuring 11, hospital officials said.

As night fell in the Iraqi capital, the rumble of powerful explosions could be heard coming from the western edge of the city but the cause of the blasts could not be determined.

The blast in Tikrit, 80 miles north of Baghdad, sent frightened guests of the three-story hotel running into the street, some barefoot, others with bloodstains on their clothes.

U.S. military officials blamed the attack on “anti-Iraqi forces,” the term they use for insurgents. They said two rockets were fired, one of which exploded near an American military position but caused no damage or casualties.

U.S. officials say Allawi will personally issue the final order to launch any all-out assault on Fallujah and other Sunni insurgent strongholds north and west of the capital.

Allawi gave no deadline for talks with Fallujah city leaders to bear fruit, but he insisted they must hand over foreign fighters and allow Iraqi security forces to take control of the city.

“We have now entered the final phase of attempts to solve Fallujah without a major military confrontation. I hope we can achieve this, but if we cannot, I have no choice but to secure a military solution,” he added.

Allawi also said authorities have arrested 167 Arab foreign fighters, who are in Iraq’s custody. He said the government had identified financiers abroad and would ask other Arab governments to send them back for prosecution.

Sunni clerics have threatened to call for a nationwide civil disobedience campaign and to boycott national elections in January if the Americans attack Fallujah.

Fallujah has become the nexus of an insurgent network that has carried out numerous car-bombings and beheadings of foreign hostages since the Bush administration ordered Marines to halt an offensive against the city in April.

Fallujah is believed to be the headquarters of Jordanian militant Abu Musab al-Zarqawi, who announced his allegiance to al-Qaida this month. Al-Zarqawi’s group is believed responsible for numerous beheadings of foreign hostages, including Japanese backpacker Shosei Koda, whose body was found Saturday night in Baghdad wrapped in an American flag.

“The terrorists and insurgents continue to use Fallujah and the Fallujah people as a shield for their murderous acts,” Allawi said. “Some of the most incredible crimes have been committed in Fallujah and out of Fallujah by these terrorists.”

He said he “cannot stand back and allow such attacks to continue.”

An offensive against Sunni strongholds would present a major challenge to Allawi, a secular Shiite Muslim politician who cultivated links to the CIA and the U.S. State Department during his years in exile in London during Saddam’s regime.

In April, U.S. Marines launched a major assault on Fallujah after the slaying of four American security contractors, whose burned and mutilated bodies were dragged through the streets and hung from a bridge over the Euphrates River.

However, the assault unleashed a firestorm of criticism among Iraqis, including key members of the U.S.-appointed Iraqi Governing Council, who complained of hundreds of civilian casualties. The Marines lifted the siege after three weeks and handed security over to a brigade of Fallujah residents under the command of Saddam’s former officers.

The brigade melted away and the city fell under the control of hardline Sunni clerics and their mujahedeen fighters.

American officers estimate up to 5,000 Islamic militants, Saddam loyalists and common criminals are holed up in Fallujah. Thousands more operate in other cities of the Sunni Triangle and in Baghdad.

In preparation for an offensive, hundreds of British troops have moved into an area south of Baghdad to free up American forces for operations west of Baghdad. British press reports said four mortar shells landed early Sunday at a British camp south of Fallujah. Two rockets also exploded at the perimeter of the airport in the southern city of Basra where the British contingent has its headquarters.

There were no casualties or serious damage in either attack, British media reports said.