Captain Jason Smith told AFP one marine was hit in the head and another in the leg after a squad went to take out the suspected hideout of a sniper who had started to fire on their compound at about noon.

"We've got a ceasefire but they're not honoring it," he said in a disused garage where he was hunkered down with dozens of other soldiers in a desolate industrial area in southeastern Fallujah.

Sergeant Daniel Almond said another group of marines sent to root out the sniper clashed with four Iraqis armed with rocket-propelled grenades, killing one of them.

The rest fled, he added.

The incident, which lasted about an hour, came some two hours after a ceasefire came into force following six days of fighting between US forces and insurgents in the city and appeared to be generally holding.

WAR.WIRE