FALLUJAH is the stronghold of the Jordanian terrorist Abu Musab al-Zarqawi, the hooded figure who this week personally murdered two Americans and now holds the fate of Ken Bigley, the last British hostage, in his hands.

It is a town that US forces abandoned to Iraqi militants after weeks of bloody battle last spring. And it is a town that has now become the hostage-taking capital of Iraq and the wellspring of a ruthless insurgency that has spread west to Baghdad, down 30 miles of the most dangerous highway in the country.

Al-Zarqawi, his Tawhid wal Jihad (Unity and Holy War) group and their militant allies are more than just a menace to Western contractors or US forces. They pose an existential threat to the Iraqi State. While their operations go largely unchecked, whole sectors of the Iraqi heartland have become ungovernable and even parts of the capital are considered no-go areas.

While Fallujah remains a safe haven for al-Zarqawi and his swelling ranks of followers, there seems little hope that Iraq will be able to hold meaningful democratic elections in four months’ time.

US commanders on the ground are in little doubt of what needs to be done. Five months after they pulled out, they almost openly admit that they will have to mount a winter offensive to retake a town they describe as a “cancer” that must be eradicated.

John McCain, the Republican senator from Arizona and a Vietnam veteran, spoke for many in the military when he said this week that unless the insurgent stronghold was eliminated, Iraq’s future looked bleak. “As Napoleon said: ‘If you are going to take Vienna, you take Vienna,’ ” he said.

“I would never have allowed those sanctuaries to start with. And allowing those sanctuaries has contributed significantly to the difficulties we are facing, which are very, very significant.”

In Saddam Hussein’s time, the drab town of 300,000 people on the banks of the Euphrates was a stop on the highway from Baghdad to Jordan and Syria. The high street was lined with car workshops and kebab stalls.

But unlike other provincial centres, it had two distinct qualities. The Sunni Muslim town prided itself on having more mosques than anywhere else in Iraq. The local tribes also had a tradition of resisting outside authority, be it the British, Saddam or, more recently, the Americans.

Today Fallujah is far too dangerous for any Westerner to visit and getting accurate information on what life is like inside is difficult. But its hard-pressed inhabitants do slip in and out between the daily exchanges of fire between US Marines stationed five miles outside the town and the gunmen inside, who launch ambushes, plan suicide- bombing operations and now go out on raids into Baghdad to abduct foreigners.

Abu Sattar al-Dulaimi, a car dealer who fled a week ago, said that civilians were caught between US bombing raids and the oppressive rule of the militant commanders. “You can’t work or live there. Each district is run by an ‘emir’. If you complain or speak out of turn, you are accused of being a traitor. They do not think twice before flogging or shooting you,” he said.

Mahmoud Zaal, a local reporter, confirmed that up to 30 suspected collaborators had been killed by the militants. He said that many civilians had fled Fallujah because of daily attacks on four main districts by US warplanes and artillery. Normal life has virtually ground to a halt. Basic services such as electricity and water are cut regularly.

People venture out for a few hours in the morning, but civilians abandon the streets to the fighters at dusk. Many women and children have gone.

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