Iraqi forces battle for control of oil city
* Security forces fight militias in Basra
* Sadr threatens national "civil revolt"
* Fighting, curfews in southern towns
(Updates throughout, adds White House comment)
By Aref Mohammed
BASRA, Iraq, March 25 (Reuters) - Iraqi security forces battled fighters loyal to Shi'ite cleric Moqtada al-Sadr in Basra on Tuesday in a drive to win control of the southern oil city, triggering a wave of violence in Baghdad and other cities.
Police and health workers said at least 12 people were killed in the fighting in Basra, which threatened a ceasefire Sadr imposed on the militia last August.
An Iraqi army commander said only that "many outlaws" had been killed in clashes in central and northern Basra where Sadr's Mehdi Army has a strong presence.
The operation, which Prime Minister Nuri al-Maliki said was aimed at "cleaning up" Basra of "criminals, terrorist forces and outlaws", provoked a fierce reaction from the Mehdi Army.
A hail of rockets and mortars hit U.S. military bases in Baghdad and the "Green Zone" government and diplomatic compound. One U.S. soldier was killed by a mortar attack on his patrol in northern Baghdad, a U.S. military spokesman said.
Mehdi Army fighters, who have been keeping a relatively low profile since Sadr called the truce last August, also rose up in several Iraqi towns, taking to the streets and battling police.
By nightfall, many towns and cities across southern Iraq were under curfew as authorities sought to prevent further outbreaks of violence.
Sadr, an influential leader who has not been seen in public for months, issued a statement calling on Iraqis to stage sit- ins all over Iraq and said he would declare "civil revolt" if attacks by U.S. and Iraqi forces continued.
The operation in Basra, whose vast oilfields provide much of the Iraqi government's revenues, began at dawn and involved thousands of Iraqi troops.
"This operation will not come to an end in Basra without the law prevailing and being respected," government spokesman Ali al-Dabbagh said after Maliki arrived in Basra to personally oversee the operation.
Sadr's followers and the rival Supreme Islamic Iraqi Council (SIIC), one of the biggest parties in Maliki's government, are fighting for power in Basra along with Fadhila, a small Shi'ite party that controls key oil industry jobs. Criminal gangs also smuggle oil and run extortion rackets.
In Washington, White House spokeswoman Dana Perino praised the operation as "Iraqi-led and Iraqi-initiated.
"Prime Minister Maliki made a brave decision to go into a very difficult situation where you have terrorists and insurgents that have infested the area, and he's taken his forces down there and are working with them," she said.
Clouds of black smoke rose above Basra and explosions and gunfire could be heard throughout the day. Reuters Television pictures showed gunmen firing mortars in the street, while others drove around in captured Iraqi army and police vehicles.
The U.S. military, which once called the Mehdi Army the greatest threat to peace in Iraq, says the seven-month-old ceasefire is one of the main factors contributing to a 60 percent drop in violence in Iraq since last June.
But the militia has grown increasingly frustrated with the ceasefire, saying it is being abused by U.S. and Iraqi forces to make indiscriminate arrests. The U.S. military said on Tuesday it only targeted "rogue" members who have ignored the truce.
Police sources said Sadr supporters seized control of five districts in the southern town of Kut after clashes between gunmen and police. Mehdi Army fighters also battled police in two neighbourhoods in the centre of the southern town of Hilla.
In Baghdad, U.S. and Iraqi forces sealed off the Mehdi Army stronghold of Sadr City, a sprawling slum of 2 million people, after Mehdi Army fighters clashed with gunmen from the Badr Organisation, the armed wing of SIIC.
Police later imposed curfews in the southern cities of Kut, Hilla, Nassiriya, Diwaniya and Samawa.
Sadrists said a gradual "civil disobedience campaign" launched in several Baghdad districts on Monday would spread to other areas from Wednesday. As part of the campaign, pro-Sadr students forced Mustansiriya University in Baghdad to close.
(Writing by Ross Colvin, additional reporting by Waleed Ibrahim, Wisam Mohammed and Randy Fabi in Baghdad; Editing by Ibon Villelabeitia)
For factbox on Basra, click on [nL25628385]
For factbox on Mehdi Army, click on [nL25580219]
For factbox on main players in Basra, click on [nL25341622]