American forces were sealing exit routes around Baghdad last night as they tried to trap Saddam Hussein. British and US intelligence officials believe the Iraqi leader is still inside the capital. But they fear his two sons, Uday and Qusay, may already have slipped the net.

Special forces were hunting for Saddam inside Baghdad as US troops moved almost at will around its outskirts, encircling the city with vast armoured columns.

But Washington appeared nervous that the coalition may fail to find the elusive Iraqi leader. Colin Powell, the Secretary of State, said that Saddam’s fate was unimportant. “Whether he is there at the end or not, and is found or not, is almost irrelevant.”

His comments were part of a concerted change of tack by the Bush Administration as it tried to play down Saddam’s fate. The ploy is partly political, designed to persuade Iraqis that his rule is all but history. It also reflects real concerns that having had years to plot an escape, he may, like Osama bin Laden, evade capture. Ari Fleischer, White House spokesman, said that killing or capturing Saddam would “help provide clarity”, but was not imperative in declaring victory.

There were signs of desperation and panic within the Baghdad regime yesterday in an outburst of propaganda broadcasts and intelligence reports of public executions.

Iraqi television showed scenes of Saddam making his first public appearance since January 2001. The President greeted jubilant crowds on the streets of the capital in an obvious bid to convince viewers that he was still very much in control.

However, intelligence sources believe that the man was almost certainly one of Saddam’s doubles. The likelihood is that the real President is hunkered down in one of as many as 35 elaborate bunkers beneath buildings scattered around Baghdad.

Earlier, in a televised address to the nation urging his people to fight, Saddam referred to the alleged shooting-down of an Apache helicopter by a farmer last week. This appearance convinced the CIA and MI6, and proved to his people, that the Iraqi leader was alive and well enough to be in charge, despite earlier assessments that he had been seriously wounded in an attack on March 19.

In another sign that the regime was desperately trying to maintain the support of loyalists, Mohammed Saeed a- Sahaf, Iraq’s Information Minister, said “non-conventional” attacks would be launched against Americans. The attacks would be martyrdom operations. He denied that he was talking about using chemical or biological weapons.

The CIA and MI6 reported receiving dramatic accounts from inside Baghdad of summary street executions of Baathist members perceived to be disloyal. One individual was alleged to have been tied to a post and had his tongue cut out, while another was torn apart after being strapped between two cars. There are also reports of men having their genitals cut off in public.

Trouble in the city may have been spurred by the arrival of remnants of the Baghdad Division of the Republican Guard. The latest intelligence reports say that after the 1st Marine Expeditionary Force attacked it two days ago the regime set up a checkpoint on the road from al-Kut, where the division was based, to the capital.

“The aim was obviously to prevent retreating soldiers from the division from going into Baghdad to spread stories about how they were routed,” the sources said. However, the retreating troops “just drove straight through the checkpoints” to reach the capital.

Despite the evidence of disarray in the Iraqi regime, the intelligence and military assessment yesterday was that the war was by no means won, and that Saddam still had the potential for causing surprise.

“One thing which is causing concern is the whereabouts of many of the Republican Guard tanks and units,” one source said. Early this morning, American forces pounded Baghdad’s eastern flank with an intense artillery barrage, which appeared to herald the opening of a second front. A Reuters correspondent said the battle had intensified. “You can see explosions across the whole front, missiles, anti-aircraft fire, cruise missiles,” he said.

The American 3rd Infantry Division was fanning out to the west and south of the city yesterday, having secured the airport. The 1st Marine Expeditionary Force was advancing towards the eastern outskirts, and the 101st Airborne Division cut off the road north to Tikrit.

Intelligence sources said that coalition commanders had been tipped off that residents of blocks of flats in a suburb of Baghdad had been ordered out. “There is a clear intention to send troops into these apartments to mount ambushes and provide sniper positions,” a source said.

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