Reuters reports that Sadr vows to stay in his Najaf stronghold until victory or death:

"I will not leave this holy city," he told his fighters, who chanted "no, no to America" in response. "We will remain here defending the holy shrines till victory or martyrdom."

A Sadr spokesman had earlier said the cleric would pull his forces out of Najaf if U.S. forces also withdrew and religious authorities agreed to administer the city's sacred sites, the holiest for Iraq's majority Shi'ite Muslims.

But the fiery speech, designed to rally militia fighters who have suffered heavy losses against U.S. warplanes and tanks, appeared to reject earlier government overtures for a deal to end the confrontation.

The U.N. Security Council unanimously approved a resolution Thursday extending the U.N. mission in Iraq for a year, but how significant a role the world body can play remains in question because of continuing insecurity in the country.

The resolution adopted by the 15 council members reaffirms "that the United Nations should play a leading role in assisting the Iraqi people and government in the formation of institutions for representative government."

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U.S. and Iraqi troops have stormed Al Sadr's home, but the cleric was nowhere to be found.

More as we get it.

Update: ABC has a short bit on the news:

NAJAF, Iraq (Reuters) - U.S. forces stormed the home of rebel Iraqi Shi'ite cleric Moqtada al-Sadr in the holy city of Najaf on Thursday, witnesses said.
They said servicemen went into the house in the center of the city after warplanes bombed nearby targets and battled militiamen loyal to Sadr.

The cleric was thought to be at Imam Ali shrine, about one mile away.

Al Jazeera:

The deputy governor of Najaf has resigned in protest against the US offensive on the city even as a series of explosions rocked Najaf as fighting between US marines and Al-Mahdi fighters entered a second week.
"I resign from my post denouncing all the US terrorist operations that they are doing against this holy city," Jawdat Kadam Najim al-Kuraishi, deputy governor of Najaf, said on Thursday.

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Iraq's delayed national conference to select an interim national assembly will convene Sunday, Minister of State Qassim Dawoud announced Thursday.

The conference, considered a crucial step in the country's move toward democracy, was to have been held in late July, but was delayed to allow more time for preparations - a postponement encouraged by the United Nations.

Key political groups had said last month that they would boycott the conference, some areas of the country complained they hadn't been given enough time to agree on delegates, and officials expressed worries the gathering would be a target for terror attacks.

U.N. officials hoped to persuade resistant factions to attend, but it wasn't immediately clear if they had changed any minds.

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AP :

Iraqi Prime Minister Ayad Allawi called Thursday on the Shiite militants fighting U.S. and Iraqi forces in the holy city of Najaf to put down their weapons and leave the Imam Ali shrine where they have sought refuge.
Allawi's appeal, made in a statement read by Iraqi officials, came as U.S. and Iraqi forces began a major operation in Najaf intended to defeat the militants.

The militants have been holed up in the shrine, one of the holiest sites in Shia Islam, during the fighting and the U.S. military accused them of launching attacks from the shrine compound.

"These places have never been exposed to such violations in the past," he said, adding that the violence has killed many innocent people.

"Our government calls upon all the armed groups to drop their weapons and return to society," Allawi said. "We also call upon all the armed men to evacuate the holy shrine and not to violate its holiness."