Stephen Farrell, Middle East correspondent for The Times, explains why the attack on the Palestine Hotel is a symbolic victory for the insurgents

"The Palestine is a 17-storey hotel which stands opposite the Sheraton. Between them, the two house at least two major media networks.

"There are barricades and razor-wire all around the complex and it is unquestionably the most heavily guarded site in Baghdad outside the Green Zone.

"In the last month the US military tried to withdraw the soldiers guarding the entrance after many of the contractors who used to supply the military moved out. The media organisations kicked up such a fuss that America reversed its decision and put them back.

"I was in there 48 hours ago visiting friends: it has Humvees all over the place, an armoured car at the entrance and American soldiers on the checkpoint. The buildings are the tallest in Baghdad and occupy a strategic position on the bank of the River Tigris directly opposite the Green Zone.

"In Saddam's day the area was always very tightly controlled because he knew that anyone who entered the area could easily fire rockets into what were then his Government buildings.

"You have the Green Zone to the west and if you consider the rest of Iraq to be a 'red' zone, then these heavily fortified hotels are the equivalent of an 'orange' zone. However, although it is under heavy security, the presence of Iraqi police and soldiers draws attention to it.

"There have been attacks there before - in April 2003 an American tank fired a shell into it killing two journalists. In the past, insurgent attacks were reasonably regular; with shots and explosions shattering the glass.

"The hotel is also symbolic because it was from their that the old ministry of information used to give its briefings to the Iraqi people. During the closing days of Saddam's era, the roof of the Hotel Palestine was where 'Comical' Ali would hold some of his briefings.

"It was outside, in Paradise Square, that the statue of Saddam was toppled signifying the end of his rule.

"This would be a prize scalp for the insurgents; the next best thing to hitting the Green Zone - one of the highest profile American targets in Baghdad.

"My guess is that they were killing Iraqi soldiers, whom they consider to be collaborators, alongside American soldiers - and doing so on live TV."

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