BAGHDAD - Iraq's interim government will declare a nationwide arms amnesty next week, but insists the city of Fallujah must turn in foreign militants or face assault, National Security Adviser Kassim Daoud said Monday.

Daoud would not be drawn on the timing of a Fallujah offensive if the city did not hand over militants led by Jordanian Abu Musab Zarqawi, America's top enemy in Iraq. "We have a timetable and we will stick to it," he told Reuters.

Addressing Iraqi lawmakers, interim Prime Minister Iyad Allawi confirmed the nationwide arms handover, a plan that, depending on its success, could point to the government's ability to organize nationwide polls by the end of January.

U.S. forces released Fallujah's chief negotiator, whom they detained Friday, after battles and air strikes on the edge of the rebel-held Sunni Muslim stronghold west of Baghdad.

The interim government has vowed to crack down on insurgents and pacify Iraq before the January election.

In a country awash with guns, Iraqis are permitted one AK-47 per household and handguns are largely overlooked. But many families possess more than one weapon.

It was unclear whether money would be exchanged for weapons under the new amnesty.

Previous gun amnesties since last year's U.S.-led invasion of Iraq have involved heavier weapons.

Daoud said a cash-for-weapons scheme already under way in Baghdad's Sadr City district, a stronghold for Shi'ite militants, had been extended to Thursday. Allawi said the extension, the second so far, would be the last.

Daoud said many people still wanted to disarm in Sadr City. "It would not be fair to search houses now when these people have not had enough time to turn over their weapons," he said.

Loyalists of fiery cleric Moqtada Sadr had been fighting U.S. troops in Sadr City before the arms handover was agreed.

Fallujah, a hotbed of Sunni insurgency, is an even tougher challenge for the interim government and its U.S. backers.

Residents said Fallujah was relatively quiet after Sunday's fierce battles, in which hospital officials said four civilians were killed and 12 wounded. A child was among the dead.

"I think the residents of Fallujah don't want this sort of peace. They want real peace, not a peace that stabs in the back and strikes and destroys homes and kills women," Fallujah representative Khaled Jumaili said after his release.

U.S. marines detained the bearded cleric Friday while he was taking his family out of the city for safety.

QUEST FOR ZARQAWI

Fallujah residents, enraged by U.S. air strikes that they say kill civilians, deny knowledge of Zarqawi's network.

Asked what evidence the government has that Zarqawi's group is operating in Fallujah, Daoud said: "There are many of his followers, Jihadists (holy warriors). The proof is there."

Jumaili said the hunt for Zarqawi was a pretext to attack Fallujah, comparing it to U.S. assertions that Saddam Hussein had weapons of mass destruction before last year's invasion.

Britain is considering a U.S. request to move troops now based in southern Iraq into more potentially dangerous areas to cover for U.S. units battling rebels in Falluja and elsewhere.

Defense Secretary Geoff Hoon said he had not made any decisions but expected a final assessment from his officials next week. Any such deployment would reignite anger in Britain over Prime Minister Tony Blair's support for the war.

Insurgents struck at Iraq's fledgling security forces again with a car bomb blast near a Baghdad cafe used by Iraqi police. The U.S. military said eight people were killed, including a policeman, and 28 wounded, in the Sunday night attack.

Earlier, a car bomb that blew up in traffic killed five people and wounded 15 in the northern city of Mosul. The beheaded body of an Iraqi translator employed by U.S. troops was found near Baiji, north of Baghdad, police said.

Another beheaded body, the hands still bound, was found near Balad, also north of Baghdad. A militant group claimed it had killed two Macedonian hostages for being "spies." Three Macedonians were kidnapped in August, but it was not clear if those killed were part of the same group.