"As part of the overall effort to restore security and stability in Fallujah, the 1st Marine Expeditionary Force (1st MEF) is overseeing the formation of the first battalion of the Fallujah Brigade," the 1st MEF said in a statement.

"Until the battalion's units demonstrate a capability to man designated checkpoints and positions, marines will continue to maintain a presence in and around Fallujah ... Coalition forces will maintain the right of freedom of movement in all areas of the AOR (area of operation)."

US Brigadier General Mark Kimmitt earlier confirmed in Baghdad the marines were not retreating from Fallujah, and professed confidence in the commander of the new security force, General Jassem Mohammed Salah, who served in Saddam Hussein's military.

"We are certainly not withdrawing from Fallujah. Nothing could be further from the truth," Kimmitt said.

The marines also declared they had not budged on their demands to clean the city of insurgents and find the killers of four US contractors who were brutally murdered and mutilated in Fallujah on March 31.

The murders led to the marines to open a siege of the city on April 5.

The marines' "objectives remained unchanged to eliminate armed groups, to collective and ... control all heavy weapons and turn over foreign fighters and disarm anti-Iraqi insurgents in Fallujah," the statement said.

When the Fallujah Brigade's 1st battalion has restored calm, it will work alongside police in "identifying the murderers and mutilators of the four American contractors on the 31st of March and the criminals responsible for the 14th February attack on the Fallujah police station," it said.

That was a reference to the attacks by dozens of insurgents on the police and Iraqi paramilitary stations in Fallujah that claimed dozens of lives and resulted in the escape of at least 70 prisoners.

The statement also said marines will allow the return of 200 families per day to the city when the situation has stabilised.

The commander of the 1st MEF, Lieutenant General James Conway, met Salah and the marines praised the Iraqi veteran and the 200 men who showed up with him in Fallujah Friday.

"They look like they are ready to do business," Colonel John C. Coleman, the 1st MEF chief of staff, told reporters.

"They have the full weight and support of the coalition forces."

Coleman also confirmed the new force had taken over marine positions in the city and said the hand over of security responsibility will be gradual.

"We had a transition of forces, as their forces came in line they supplanted ours," Coleman said.

"Day by day they'll judge us and we'll judge them... We're working ourselves out of a job."

WAR.WIRE