The U.S. invasion military said on Sunday a bodyguard of Iraqi commander "Chemical Ali" was killed in a precision airstrike, but Iraq dismissed reports the military chief himself may have died in the attack. Asked whether Chemical Ali had been killed when U.S. invasion forces bombed his house in the southern city of Basra early on Saturday, Information Minister Mohammed Saeed al-Sahaf told reporters in Baghdad: "Let them (bask) in their illusions."

Ali Hassan al-Majid, a cousin of Iraqi President Saddam Hussein , earned his nickname "Chemical Ali" for overseeing the use of poison gas against Kurdish villagers in 1988.

He is a member of Saddam's inner circle and has been in charge of Iraq's southern front during the war. U.S. invasion forces bombed his house in the belief that he had just entered it.

"At this point we can't say whether Chemical Ali was a casualty in that attack, but we have confirmed that his bodyguard is a casualty," Capt. Frank Thorp told Reuters earlier on Sunday at Central Command in Qatar.

"It's very clear we're one step closer to bringing this regime down," he said.

U.S. officials said around 3,000 local residents had taken to the streets of Basra on Saturday cheering and celebrating, though they said it was unclear whether the event was directly linked to the attack on Majid's house.

"We have seen some reaction from the people in Basra to the events of the last couple of weeks," Thorp said. "Just yesterday we had reports of about 3,000 Iraqi citizens out in the streets celebrating their new freedom."

U.S. Central Command said in a statement on Saturday that the strike on the house was "part of an ongoing effort to end Saddam Hussein's regime."

The statement said two aircraft had struck Majid's home in Basra, Iraq's second city, with laser-guided munitions.

British invasion troops have been surrounding Basra since soon after the U.S.-led war on Iraq began on March 20, but Saddam loyalists continue to hold out there.

U.S. Marines have been hunting Majid across southern Iraq. On Monday, they launched a dawn raid on the town of Shatra after receiving intelligence he was there with other senior Baath party officials who were coordinating paramilitary forces.

"We have been tracking him for a long time," Peter Pace, vice chairman of the U.S. joint chiefs of staff, told ABC television on Sunday.

"We do take all intelligence reports of his possible locations very seriously. Whether or not we got him this time, we'll have to wait and see," he added.

Maj. Gen. Victor Renuart told a news conference at war headquarters in Qatar on Saturday that Majid was thought to have been in the hospital in the southern town of Nassiriya from which special forces rescued U.S. soldier Jessica Lynch.

"We think that he was there, he had used that area but on the evening of the attack he was not located in that hospital,"

Renuart said. "That's not to say we haven't been tracking him down in some other locations and we'll continue to do so."

PHOTO CAPTION

US marine wears a gas mask while continuing with his daily activities after a gas alarm sounded. The threat of an Iraqi chemical or biological attack against invasion forces has become "negligible," US military sources in Iraq told AFP.(AFP/File/Cris Bouroncle)