* Maliki offers amnesty to militiamen

* Suicide bomber kills nine in Diyala

(Adds U.S. air strike in Basra)

By Khalid al-Ansary

BAGHDAD, April 4 (Reuters) - Iraqi Prime Minister Nuri al-Maliki said on Friday his security forces would stop arresting militiamen if they gave up their weapons, apparently seeking to defuse tensions with Shi'ite cleric Moqtada al-Sadr.

In a statement, Maliki said he would grant amnesty from prosecution to anyone who took part in clashes in southern Iraq and Baghdad last week if they handed in their guns.

The statement appeared to soften Maliki's position from Thursday, when at a news conference he threatened a crackdown on Sadr's strongholds in Baghdad in the wake of some of Iraq's heaviest street fighting in a year.

"To give space and an opportunity for those who are remorseful and are willing to give up their weapons, all pursuits and raids in all areas will be stopped. Those who take up arms will face the law," Maliki said.

His statement was released just before Muslim midday prayers, after which hundreds of Sadr's followers staged sit-ins in the capital's Sadr City and Shula neighbourhoods, Sadr strongholds which remain sealed off after last week's fighting.

Sadr followers chanted anti-U.S. slogans and held up caricatures of Maliki and umbrellas to shield themselves from the sun. The sit-ins were a prelude to a huge demonstration Sadr has called for next week.

"We are calling for the withdrawal of the (U.S.) occupiers, for detainees to be released and for an end to targeting Sadr partisans and the Mehdi Army who are defending the rights of the people," said day-labourer Saad Hussein, 30, in Sadr City.

Maliki ordered a crackdown on militia in the southern city of Basra last week but his army faced stiff resistance from the Sadr's Mehdi Army fighters. U.S. and British forces had to launch air and artillery strikes to support Iraqi troops.

Defence Ministry spokesman Major-General Mohammed al-Askari told Reuters around 1,000 Iraqi soldiers had deserted during the fighting in Basra, something that will concern Washington.

The ability of Iraq's security forces to maintain security as the number of U.S. troops is reduced will be a key topic when the top American officials in Baghdad deliver a progress report on Iraq to the U.S. Congress next week.

ATTACK ON CONVOY

In a sign of the volatility that persists despite an end to major fighting, a British military spokesman said U.S. helicopters had launched a missile strike in Basra. Eyewitnesses said there were casualties and clashes followed the attack.

Gunmen fired rocket-propelled grenades at a convoy carrying Askari and other senior Iraqi commanders in Basra, said a Reuters reporter in the convoy. No one was hurt.

Iraqi security forces, backed by U.S. special forces, killed seven suspected militants and detained 16 others in three operations in Basra on Thursday, the U.S. military said.

Sadr's movement has told the Mehdi Army to ignore previous Maliki orders for members to hand in their weapons.

Maliki had been uncompromising toward the Sadrists, fellow Shi'ites who backed the prime minister's rise to power in 2006 but split with him a year ago, partly over his refusal to set a timetable for the withdrawal of U.S. forces.

Sadr has called for 1 million Iraqis to march against what he calls the U.S. occupation of Iraq next week on the fifth anniversary of the fall of Baghdad. The government says it will not try to block next week's march as long as it is peaceful.

Sadr officials said on Friday the march would be in Baghdad, not the holy Shi'ite city of Najaf as announced on Thursday. The demonstration raises the prospect of unrest coinciding with the progress report to Congress by top U.S. officials in Iraq.

Sadr has millions of followers and was able to summon tens of thousands of people onto the streets of Baghdad for demonstrations during last week's fighting.

The violence exposed a deep rift within Iraq's majority Shi'ite community and served as a reminder of the instability after months of security improvements. Hundreds died, making March the deadliest month for Iraqi civilians since last August.

Iraq's violence last week was mostly in Shi'ite areas in the south and in Baghdad. But in a reminder of the threat from militants in Sunni Arab areas in the north, a suicide bomber blew himself up at a funeral on Friday in Diyala province.

The attack killed nine people and wounded 30 others, a senior Iraqi security official said. (Additional reporting by Aref Mohammed in Basra and Peter Graff and Aws Qusay in Baghdad; writing by Dean Yates; editing by Andrew Roche)

AlertNet news is provided by