PRIME Minister Tony Blair is to meet US President George Bush and UN Secretary General Kofi Annan for crisis talks on the escalating rebellion in Iraq, it was confirmed yesterday.

The announcement came as US forces bombed a mosque compound in the Sunni city of Fallujah, killing a reported 40 Iraqis.

The Americans said they were responding to shots from within the compound, but witnesses said that worshippers gathering for afternoon prayers were among the dead.

Marines fired a rocket and dropped a 500lb laser-guided bomb on the compound.

They had waged a six-hour battle around the mosque with the militants holed up inside before a Cobra helicopter fired a Hellfire missile at the base of its minaret, and an F-16 dropped the bomb, said Marine Lieutenant Colonel Brennan Byrne.

The fight began when a marine vehicle was hit by a rocket-propelled grenade fired from the mosque, wounding five marines.

Lt Col Byrne said: "We believe we killed a bunch of these guys.

"Marines will never do anything like this unless fired upon.

"We now control 25 per cent of the city."

The mosque attack added to a death toll which had already reached at least 30 coalition troops and 150 Iraqis since the weekend, as US forces sought to break Sunni rebellions in Fallujah and Ramadi while also facing attacks from supporters of Shia cleric Muqtada al-Sadr elsewhere in the country. Sadr's supporters drove Ukrainian forces out of the southern city of Kut, raising concerns over the ability of US allies to control the uprising.

Mr Blair and Mr Bush discussed the situation in a 30-minute telephone call yesterday, ahead of their meeting and lunch in Washington next Friday.

Downing Street said the talks would cover Iraq, the Middle East peace process, weapons proliferation and the fight against terrorism.

Mr Blair will have dinner with Mr Annan in New York the previous evening to discuss the UN's role in the run-up to the planned handover of sovereignty to an Iraqi-led administration at the end of June.