US forces also hailed the capture in the capital of Abu Abbas, the Palestinian who masterminded the 1985 hijacking of the Italian cruise liner Achille Lauro, as proof that Saddam Hussein’s regime “harbored terrorists”.

One week after Baghdad fell into US hands following three weeks of heavy bombing, a US Central Command spokesman said Franks was “in Baghdad and he is meeting with his commanders”.

US President George W. Bush called yesterday for the United Nations to lift sanctions on Iraq now that Saddam Hussein’s regime has “passed into history.”

“Now that Iraq is liberated, the United Nations should lift economic sanctions on that country,” Bush told Boeing defense workers yesterday in his first speech to a civilian audience outside of Washington since the war began.

Twelve-year-old Ali Ismail Abbas, who has come to symbolize the human cost of that bombing after losing both arms and suffering severe burns in a US missile strike that killed his parents, underwent surgery soon after arriving in Kuwait.

US forces said they had achieved “yet another victory in the global war on terrorism” with the capture of Mohammad Abbas, known as Abu Abbas, who led the 1985 hijacking of the Achille Lauro in which elderly, wheelchair-bound American, Leon Klinghoffer, was shot dead and thrown overboard.

Abbas, leader of the Palestine Liberation Front who was living in Iraq under the protection of Saddam, was seized when US troops stormed his hide-out in southern Baghdad on Monday, US officials said.

His presence there proves the Iraqi regime supported terrorism, Brig. Gen. Vincent Brooks told journalists at US Central Command’s war base in Qatar.

“He was a terrorist and he remains a terrorist,” he said.

“But more importantly, he was found in Baghdad and we’ve said for a long time that Baghdad and the Iraqi regime that no longer exists have harbored terrorists and provided safe haven for terrorists.”

Abbas has long renounced violence and Israel has allowed him to travel to Gaza, declaring him immune from prosecution over the hijacking.

Washington itself dropped a warrant for his arrest several years ago, but he is wanted in Italy. Abbas was sentenced in absentia in Italy to five life terms for his role in the hijacking.

Central Command declined to say what would happen to Abbas, but Italy said it would seek his extradition.

Senior Palestinian official Saeb Erekat called for his immediate release, saying the arrest violated a 1995 peace accord but a US official said he was not covered by the agreement.

US forces meanwhile launched spot raids around Baghdad in search of people linked to Saddam, who has vanished along with his two sons and most of his associates. Only two out of 55 people on a US “most wanted” list have so far been caught.

“Now that the regime is broken we are pursuing individuals in order to completely remove the potential of the regime ever returning,” Brigadier Brooks said.

Homes raided by US Marines included that of an Iraqi woman scientist wanted by the United States for her work on Saddam’s banned weapons programs, a military official said. The woman herself was not there.

An increasing number of Baghdad’s five million people returned to work after a week of frenzied looting since US forces entered the city.

The main emphasis was on repairing the electricity, water and other vital utilities knocked out in the final days of the US air campaign.

“The priority among priorities is electricity,” said Osama Zubeidi, an electrical engineer who offered his services to US forces.

US Marines officially established a civil-military center in Baghdad to direct operations for restoring the essential services and providing health care.

“US Marines are working diligently to minimize the unrest within the city of Baghdad by helping to restore water and electricity and providing humanitarian aid, medical treatment and other basic needs,” a US statement said.

But a “message to the citizens of Baghdad” distributed in English and handwritten Arabic also imposed a de facto curfew, advising Iraqis to stay off the streets between evening and morning prayers.

In the southern Iraqi desert on Tuesday, leaders and religious officials took a first step to creating a post-Saddam administration, adopting a statement declaring that a future government must be democratic and based on the rule of law, and that no leader should be imposed from outside.

With the pressure on to run to ground more of Iraq’s toppled Baathist leadership, Marines patrolling the streets of Baghdad said they were looking out for informants among the population who might point out suspects’ houses.

“Human intelligence is the best source we have to find them right now,” said Capt. Matthew Regner, intelligence officer with the US Marine First Tank Battalion. “Someone will pop up with information as to where they are sooner or later.”

It was not clear whether the woman scientist whose home was raided was Suda Salih Mahdi Ammash, known by US intelligence as “Mrs. Anthrax”, or Rihab Taha, nicknamed “Dr. Germ”. Both are said by Washington to have been top figures in Iraq’s chemical and biological weapons programs.