A deal to end a bloody standoff in Najaf appears to take hold as thousands of Iraqi Shia pour into the Imam Ali mosque and militiamen loyal to Muqtada al-Sadr begin to withdraw. The emotional chanting crowds, mostly supporters of senior Shia leader Ayatullah Ali al-Sistani, were let in Friday morning by al-Mahdi Army fighters, who have resisted a siege by US-led forces for the past three weeks. Later, many formerly besieged militiamen laid down their arms and melted away, and Iraqi police entered the mosque. Representatives of al-Sistani say they have reached an agreement last night with aides of al-Sadr to take over the highly revered religious site from the latter's militia. "We have passed three-fourths of the way and we are at an agreement that retains the honour of all those involved," a senior al-Sistani spokesman, Hamid al-Khafaf, told Aljazeera. "There is full agreement among all the parties, and the doors will never be closed in the face of a settlement," al-Khafaf said. The deal appears to pave the way for al-Sadr's movement to join the US-backed political establishment in Baghdad - an extraordinary turnaround for the Shia leader, who has been fighting US-led forces and demanding the removal of the government and all occupation troops. Clashes in Najaf - marked by heavy US bombardment of the area around the Imam Ali mosque - and in neighbouring Kufa have left hundreds dead including scores of civilians in recent weeks. **Withdrawal*** Following an announcement that al-Sadr had ordered them to disarm, al-Mahdi Army fighters began throwing their guns into wooden carts around the mosque, slipped out of their black uniforms and into civilian clothing. But elsewhere in Najaf, many militiamen refused to give up their arms and reportedly carried them away to store in safe houses. Interim Prime Minister Iyyad Allawi had offered an amnesty to the fighters, coinciding with al-Sistani's dramatic arrival in the battle-ravaged city, on Thursday afternoon. The Iraqi government said early on Friday al-Sadr would not be arrested - despite his armed challenge to its authority and outstanding warrants for his arrest. The whereabouts of al-Sadr himself, who has been offered safe passage out of Najaf by Allawi, remain unclear and no direct word from him has been heard. **Peace accord*** Al-Sistani reportedly persuaded al-Sadr late on Thursday to accept a deal ending the fighting in Najaf. The accord would demilitarize Najaf and neighbouring Kufa, with both US-led troops and al-Mahdi Army fighters withdrawing on Friday. The revered Imam Ali mosque - focus of the battle between the al-Mahdi Army and US-led air and ground forces - will be placed under the stewardship of Iraq's most senior Shia Muslim religious authorities, headed by Iranian-born cleric al-Sistani. Al-Sistani, who left for London to receive medical treatment just as the Najaf fighting erupted last month, returned to Iraq on Wednesday. Under British and Iraqi government escort, he led a convoy of followers into Najaf on Thursday to broker a peace agreement. But the refusal so far of the al-Mahdi Army to disarm and disband across the country remains a potential stumbling block. If it succeeds, the accord will end a serious challenge to the authority of Allawi's fledgling government, which continues to battle resistance elsewhere in the country and is struggling to maintain vital oil exports. **PHOTO CAPTION*** Iraqi police officers arrive at Najaf's Imam Ali mosque August 27, 2004. (Reuters)