UN officials were to hold further talks in Baghdad on resuming "no-notice" arms searches after Washington retracted hints that Iraqi fire on its warplanes could spark a war.Chief UN disarmament envoy Hans Blix was to meet Iraqi Foreign Minister Naji Sabri later Tuesday after reporting "progress" on Monday, when he kicked off the UN mission to hunt for Iraq's suspected weapons of mass destruction.

"We are continuing the talks and tonight we will tell you more," Blix said Tuesday as he left his hotel.

"I think we are making progress," Blix said Monday evening after emerging from nearly two hours of talks with Iraqi officials, including President Saddam Hussein's advisor General Amer al-Saadi.

Blix, who heads the new UN Monitoring, Verification and Inspection Commission (UNSCOM), is accompanied by International Atomic Energy Agency (IAEA) director Mohamed ElBaradei.

The two arrived from Cyprus with 24 technical experts Monday to pave the way for relaunching the work of inspectors who withdrew four years ago ahead of US-British airstrikes over alleged Iraqi obstructions.

They are working under UN Resolution 1441, which grants them unprecedented powers to search suspect sites and question Iraqi experts in an effort to end Baghdad's alleged chemical, biological and nuclear weapons programs.

Failure to cooperate this time could trigger a US-led war, a fear raised again by the official press in Baghdad on Tuesday.

Blix spokesman Ewen Buchanan told reporters "we will not say in advance where the inspections are going to take place.

"Clearly, for the inspections to be credible, they have to be no-notice ... and access (must be) provided on an immediate, unconditional and unrestricted basis" as Resolution 1441 stipulates, he said.

One of the topics discussed during Monday's meeting was the declaration which Iraq must give of its weapons programs by December 8, Buchanan said.

Blix delcared Baghdad had a "new opportunity" to disarm peacefully and avert a US strike, but he played down his potential role in setting matters on a war or peace course.

"We think that the question of war and peace depends mainly on Iraq on the one hand and on the Security Council on the other," he said.

"We will report objectively. It is for the Security Council to assess if there is a breach or not. We hope there will not be a breach," he added.

As Iraq's official press continued to predict that the new inspections would expose US "lies" about its alleged possession of prohibited weapons, a dispute between Baghdad and Washington cast a shadow over the mission.

Iraq accused the United States of seeking to use Resolution 1441 as a cover for "aggression" by claiming that Baghdad's firing on US and British warplanes enforcing "no-fly" zones in the north and south of the country could constitute a "material breach" of the resolution.

White House spokesman Scott McClellan said that the Iraqi fire constituted a "material breach" and that Washington could use this as a first step toward military intervention in Iraq.

However, Defense Secretary Donald Rumsfeld said in Chile that "someone's characterization of that as something that would trigger an action is incorrect."

Baghdad will be judged "over some reasonable period of time" for its attacks against US and British planes enforcing no-fly zones over northern and southern Iraq. "Firing at coalition aircraft is not defensible," Rumsfeld said.

"It's not for us to decide," said a Pentagon official. "But how would you justify going to war on something you have not vehemently protested before?"

F-16 fighter aircraft operating out of Turkey bombed two anti-aircraft artillery sites near the northern city of Mosul after they fired on coalition aircraft, a US defense official said.

Just hours later, US and British fighters struck two communications centers and a radar installation in southern Iraq after coalition aircraft came under a barrage of surface-to-air missile and anti-aircraft fire, the US military said.

It was the second day in a row that US warplanes had struck Iraqi air defenses after coming under anti-aircraft artillery fire, and the fifth time since the passage of the latest UN Security Council resolution on November 8.

In Baghdad, a military spokesman said US and British warplanes had bombed "civilian and services installations" in the north before being driven away by Iraqi ground defenses.

An Iraqi air defense spokesman also said Iraq opened missile and artillery fire on coalition aircraft that staged "69 armed sorties" over southern Iraq on Sunday evening and Monday morning, driving them back to their bases in Kuwait.

US and British aircraft have enforced the no-fly zones since the 1991 Gulf war. Iraq has long denounced and refused to recognize these zones, which are not spelled out in any UN resolution.

Oil prices shot up more than a dollar a barrel on Monday in New York.

US President George W. Bush made it clear Iraqi President Saddam Hussein must obey the latest UN resolution or be disarmed one way or another.

"We now have a 17th resolution and this time, I intend to work with nations that love freedom and peace, make sure the resolution stands. And if he doesn't disarm, you're right, I'll lead a coalition of the willing to disarm him," Bush said.

In New Delhi, Indian Prime Minister Atal Behari Vajpayee Tuesday issued his strongest statement yet against a US-led war on Iraq, saying no power should enforce its will on another country.

Meanwhile, a rift-plagued conference of six Iraqi opposition groups who could help form a new regime will be held in Britain next month, the organisers told AFP Tuesday after calling off a meeting set for this week in Brussels.

UN Secretary General Kofi Annan on Monday urged the Security Council not to forget the "dire needs of the Iraqi people" as world attention focuses on the resumption of arms inspections there.

A report on the "oil for food" program, containing Annan's comments, is due to be examined behind closed doors by the Security Council Tuesday.

Oil-for-food was set up in December 1996 to cushion Iraqi citizens from crippling sanctions imposed on their country after it invaded Kuwait in August 1990.

PHOTO CAPTION

Hans Blix (L) takes a break with Saddam's advisor General Amer al-Saadi