Najaf, Iraq ? Hundreds of militiamen loyal to rebel cleric Moqtada al-Sadr are rearming in their sanctuary in the Shiite holy city of Najaf in possible preparation for a new offensive, say U.S. and Iraqi officials here.

As many as 80 Iranian agents are working with an estimated 500 al-Sadr militiamen, known as the Mahdi Army, providing training and nine 57-mm Russian antiaircraft guns to add to stocks of mortars, antitank weapons, and other armaments, according to Iraqi and U.S. intelligence reports.

“They are preparing for something, gathering weapons; people are coming in buses from other parts of Iraq,” said Michael al-Zurufi, the Iraqi security adviser of Najaf Province. “The most important are the Iranians. The Iranian people are trying to reorganize al-Sadr’s militia so they can fight again.”

At the same time, heavily armed al-Sadr militiamen are waging fear tactics, kidnapping local Iraqi police and family members, occupying buildings, and arresting Iraqis deemed critical of al-Sadr or in violation of Islamic law, residents and officials say.

Meanwhile, a suicide attacker detonated a car bomb Wednesday outside the fortified enclave housing the headquarters of Iraq’s interim government in Baghdad, killing at least 10 people, and gunmen in northern Iraq assassinated a provincial governor.

Usama Kashoula, governor for five months of the northern province that includes the city of Mosul, was ambushed with machine guns and grenades while traveling in a convoy north of Tikrit in an area known for its loyalty to ousted Iraqi President Saddam Hussein.

The Baghdad bombing — which also wounded 40 people — was the worst attack in the capital since the United States transferred power to the Iraqis on June 28. The violence sent a strong signal that insurgents view the new government as an extension of the U.S. occupation.

“This is a naked aggression against the Iraqi people,” interim Prime Minister Iyad Allawi said as he toured the bombing scene. “We will bring these criminals to justice.”

Allawi said the bombing was retaliation for the government’s arrests of terror suspects. Police said they rounded up over 500 suspected criminals in one sweep this week.

Signs that the al-Sadr militia is regrouping after heavy losses in April and May come even as Iraqi leaders are attempting to nudge the firebrand cleric into the political arena. Uncertainty remains over whether the militia activity is unified and sanctioned by Al-Sadr or primarily the work of factions of his lieutenants, the officials say. Both Iraqi and U.S. officials are concerned about signs of significant Iranian influence with Al-Sadr’s forces.

“Al-Sadr’s the wild card,” says Maj. Rick Heyward, operations officer for the 25th Infantry Division’s I-14 battalion in Najaf.

In response, U.S. and Iraqi commanders are fine-tuning contingency plans for possible attacks in the city, while bolstering newly recruited Iraqi police and national guard units with machine guns and rocket propelled grenades. “Last week we bought $6,000 worth of heavy machine guns, RPG-7 rounds, AK-47s and ammunition,” Najaf Province Gov. Adnan al-Zurufi said Wednesday. “We feel that this will help eliminate the threat.”

Still, the governor and other Najaf officials readily admit they seek to avoid a confrontation with the Al-Sadr militia now if possible. “We need to build ourselves, our police, our prisons,” said Zurufi, who had only 10 police on duty when he took office in Najaf on May 5. “We have nothing here in Najaf now,” he said from his downtown office, heavily guarded by Iraqi and U.S. forces.