But more than three-quarters of senior rebel commanders have already escaped the city, said one U.S. officer. Those who remain are a "hardline group of fighters who have no intention of leaving," added Brig.-Gen. Mick Bednarek, assistant commander for operations with the 25th Infantry Division.
Baqouba, capital of Diyala province, is less than an hour's drive northeast of Baghdad. U.S. and Iraqi forces are fighting to take back the province - part of a string of offensives targeting insurgents in districts flanking the capital.
Bednarek estimated that several hundred al-Qaida fighters remain in the western half of the city.
"They're clearly in hiding, no question about it," he said in an interview with The Associated Press. "But they're a hardline group of fighters who have no intention of leaving, and they want to kill as many coalition and Iraqi security forces as they possibly can."
"It's 24-7 for us here, and it's probably the same for our adversary as well," he said. "It's house-to-house, block to block, street to street, sewer to sewer - and it's also cars, vans - we're searching every one of them."
U.S. commanders have acknowledged, however, that al-Qaida's sophisticated intelligence gathering meant its top leaders knew the attack, which began Monday, was imminent.
More than three-quarters of the senior al-Qaida leaders holed up escaped as American soldiers launched an offensive earlier this week, Lt.-Gen. Raymond Odierno, the U.S. ground forces commander, said Thursday during a one-day trip to the battlefield.
"We believe 80 per cent of the upper level (al-Qaida) leaders fled, but we'll find them," Odierno said after meeting with battalion commanders in a bombed-out hospital in downtown Baqouba. "Eighty per cent of the lower level leaders are still here."
Soldiers spread maps across rubble and pulled up charred concrete blocks as stools inside the crumbling building. Controlled explosions of roadside bombs boomed in the distance. Soldiers laden with body armour mopped sweat from their faces.
Days before the offensive, unmanned U.S. drones recorded video of insurgents digging trenches with backhoes, said Maj. Robbie Parke, spokesman for the 3rd Brigade, 2nd Infantry Division that is doing most of the fighting in western Baqouba.
Odierno, who was in charge of Baqouba as head of the 4th Infantry Division in 2003 and 2004, said he was shocked at how entrenched al-Qaida had become.
"This is not the Baqouba I knew, and we can't let this happen again," he said.
Rebel activity spiked in Baqouba in the summer of 2006, Odierno said. A U.S. air strike killed "al-Qaida in Iraq" leader Abu Musab al-Zarqawi near Baqouba in June 2006, but not before he could turn the city into a major base for insurgent operations.
Since last fall, the U.S. has kept a single brigade - 3rd Brigade, 1st Cavalry Division - in charge of all of Diyala province. It was enough to conduct sporadic attacks on al-Qaida, but not sufficiently strong to hold the entire province, Odierno said.
Since Monday, two U.S. Army battalions have launched air assaults to the south and west of the area, a tangle of narrow dirt and paved roads crisscrossing a residential area. Troops discovered at least seven homes booby-trapped with trip wires, said Col. Steve Townsend, commander of the 3rd Brigade, 2nd Infantry Division.
Two more units moved in to flank the north and east to block escape by the rebels. But by then, Odierno said, many were already gone.
"It's like jelly in a sandwich - it squirts when you squeeze it," Parke said. "We're fooling ourselves if we think we can hold them in."
Four days into the offensive, about 15 per cent of western Baqouba has been cleared, and a vehicle ban is in place, Parke said. The entire operation was expected to last 30 to 60 days, he added.