Iraqi forces entered the hospital without firing a shot, blindfolding some people and kicking down doors, according to a reporter embedded with the troops.

The forces were transported to the hospital in US marine trucks escorted by armoured vehicles.

The one-storey Fallujah General Hospital is the city’s largest, and is located on the western side on the banks of the Euphrates.

The hospital director told a reporter by telephone that the hospital had been seized.

“We are surrounded by US troops and they are telling us over loud speakers that if we leave the building we will be shot at,” said Dr Salih al-Issawi.

US troops had earlier isolated Fallujah, halting all traffic into and out of the city in preparation for an expected assault.

Troops reportedly met little resistance upon entering the city.

Meanwhile, Iraqi interim Prime Minister Iyad Allawi announced a 60-day state of emergency across Iraq, intended to secure the country in preparation for next year’s elections.

Under a state of emergency, Iraqi authorities have sweeping powers allowing them to impose curfews, ban meetings, bug communications and restrict the movement of people.

“We are going to implement it whenever and wherever is necessary. This will send a very powerful message that we are serious,” Mr Allawi said.

“We want to secure the country so elections can be done in a peaceful way.”

The 60-day state of emergency, which covers the entire country but excludes Iraqi Kurdistan in the north, was declared after a surge in violence that saw around 60 people killed in 24 hours in attacks targeting Iraqi security forces.

The Prime Minister said the order to declare emergency was the result of consultations with cabinet members and President Ghazi al-Yawar and came after all peaceful means to reign in the violence had been exhausted.

On Saturday car bombs and attacks on police and government buildings in Samarra, north of Baghdad left 36 dead.

As the state of emergency came down, Mr Allawi reiterated warnings to Fallujah rebels.

The Prime Minister has to officially give the order to launch an offensive.

US officials said insurgents had stepped up the use of mortar and other indirect fire against American positions around Fallujah and had launched more coordinated attacks against US checkpoints.