U.S. and British officials had insisted that Iraqi soldiers would receive just a single month's severance payment after the occupation administration dissolved all Iraqi security and armed forces last month.

However, faced with a deadline from former soldiers in the capital to pay up or face armed attacks, the occupation authorities announced it would pay former enlisted men their salaries provided they renounced allegiance to Saddam's Baath party, according to Agence France-Presse (AFP).

"The payments will be paid monthly and the recipients must renounce Baathism and violence," the Coalition Provisional Authority (CPA) said, adding that between 200,000 and 250,000 of the estimated 400,000 to 600,000 members of Saddam's security forces were expected to be eligible.

Officers of the rank of colonel and above have already been excluded under the coalition's policy of removing all senior Baathists from public life.

"The first payments to former soldiers will begin on July 14," the CPA said, adding that they would range between 50 and 250 dollars a month.

U.S. forces have already come under attack from demobilized troops, many of whom melted away with their weapons after the rout of Saddam's army by the U.S.-led occupation forces.

One U.S. soldier was critically injured when former soldiers launched hit-and-run grenade and sniper attacks in the heart of the northern regional capital of Mosul earlier this month.

U.S. troops also open fired on ex-soldiers outside the occupation authority's Baghdad headquarters last Wednesday, killing two people in the first such incident in the capital since the entry of U.S. troops on April 9.

New Iraqi Army

U.S. forces in Iraq are reportedly coming under huge stress

The occupation administration also announced that it would start recruiting for a promised New Iraqi Army next week, as it moved to provide long-term employment for the mass of discontented but well armed and well trained enlisted men now out of work.

"A division of 12,000 soldiers will be trained and operational in one year," the authority said, adding that the force would increase within two years to three divisions of 40,000 soldiers.

Occupation officials said repeatedly that an army of 40,000 to 50,000 troops should be adequate for Iraq's population of some 26 million.

The coalition's policy U-turn on paying soldiers came as virtually daily protests by demobilized soldiers around Iraq culminated in a noon (0800 GMT) ultimatum from former troops in the capital who had threatened to launch “suicide attacks” against U.S.-led occupation forces if their demands were not met.

Pipelines Torched Again

Pipelines are attacked by elements apparently bent on disrupting U.S. plans to use Iraqi oil revenues

The disbanded soldiers won the salary battle as Iraq's fuel pipelines came under fresh attack Monday by elements apparently bent on disrupting U.S. plans to use Iraqi oil revenues to “rebuild the country”, according to AFP.

The third attack on Iraq's pipelines in less than two weeks hit in the northwest of the country on what was thought to be a key fuel line to Syria, amid a warning that such attacks could become a daily occurrence.

"The ministry is aware of an attack near al-Abidiyah al-Gharbiya not far from the Syrian border," an oil ministry official told AFP, speaking on condition of anonymity.

"It seems there are people prepared to mount such attacks every day on Iraq's pipelines," he added, after a gas duct exploded west of Baghdad late Saturday in a blast described by residents as sabotage.

U.S. military officials said they were unable to confirm the attack, which comes as the latest challenge to their plans to use the country's vast oil wealth - the world's second largest known reserves - to fund reconstruction.

Oil prices spiked after the blast, with fears that a deteriorating security situation could affect the resumption of crude exports.

A similar explosion holed an oil pipeline to Turkey earlier this month, and officials said Sunday repairs were still ongoing, delaying shipments.

Despite U.S. officials insisting that the security situation in Iraq is improving, the blasts have exposed how easily those opposed to the U.S. occupation are able to disrupt rebuilding efforts, AFP said.