Iraq's new prime minister, Ayad Allawi, was Wednesday given sweeping powers to counter insurgents, including the right to declare a state of emergency and impose nationwide curfews.
The package of measures will also allow him to appoint military governors to take charge of cities or provinces, close Iraq's borders, seize the assets of suspects and monitor their phone calls and emails.
The national security law, passed unanimously by the cabinet, was unveiled by ministers in the heavily guarded "green zone" in central Baghdad as masked fighters battled Iraqi police and US troops less than a mile away.
Although car bombs and mortar attacks have become a regular feature in the capital, it was the first time running gun battles have taken place in daylight so close to the centre.
The emergency law has several built-in safeguards to prevent the risk of another one-man dictatorship. Article 12 states that it cannot be used to delay the national elections set for January. Article 11 says it cannot abrogate the interim constitution agreed in March.
This constitution point was demanded by Kurdish ministers who were upset last month when the UN security council approved the transfer of sovereignty but failed to mention the constitution, which protects Kurdish autonomy and gives Kurds certain veto rights.
The prime minister can only take the special powers after unanimous approval from the three-person presidency, which is led by a Sunni with Shia and Kurdish deputies.
The area covered by a state of emergency has to be spelt out clearly and it may only last for 60 days, subject to renewal for a further 30 days at a time.
The law was announced by the ministers of justice and human rights, who stressed they would monitor its use and punish any violations.
The justice minister, Malik Dohan al-Hassan, said: "We realise this law might restrict some liberties, but there are a number of guarantees. We have tried to guarantee justice and human rights."
The prime minister will need warrants from an Iraqi court before ordering arrests and anyone detained must appear before a judge within 24 hours. It was not clear last night whether the new law applies to foreign troops, now known as the multinational forces. They regularly cordon off areas, search houses, conduct mass arrests, and hold prisoners incommunicado for weeks.
The battle in central Baghdad left four people dead. US armoured personnel carriers moved in and two Apache helicopters fired on buildings after insurgents initially attacked Iraqi police. In another part of Baghdad close to the green zone, four mortars landed yesterday morning near the headquarters of Mr Allawi's political party, and a house he sometimes uses. Six people were injured.
The Arabic satellite channel al-Jazeera said yesterday an Iraqi group had captured a Filipino working in Iraq and was threatening to kill him unless Manila withdraws its force of 50 within 72 hours. It showed images of three gunmen and a man dressed in an orange jumpsuit kneeling in front of them. The group said it had already killed an Iraqi security guard accompanying the man.
Although US planes have dropped several bombs on the city of Falluja during operations mounted to find Mr Zarqawi, figures released yesterday suggest the role of foreign insurgents has been exaggerated. Foreigners amount to less than 2% of prisoners in the hands of the security forces. US officials say 90 of the 5,750 detainees in US control are foreign, half of them from Syria.