BAGHDAD - The Pentagon death toll in Iraq reached at least 1,002 on Wednesday, nearly 18 months after the invasion, as the brazen abduction of two Italian women aid workers in central Baghdad sparked a new hostage crisis.

UN Secretary General Kofi Annan, in a report to the UN Security Council on Tuesday, said violence in Iraq may threaten elections scheduled for January 2005. Postponing the vote would be a severe blow for the US-backed interim government.

In one of the biggest strikes against guerrillas, the US military said as many as 100 militants had been killed on Tuesday in fighting in the hotbed Iraqi town of Falluja, some 50 km west of Baghdad.

US warplanes pounded suspected guerrilla positions for a second consecutive day on Wednesday, and a doctor said at least two Iraqi men were killed.

Adding to the growing US death toll, one US soldier was killed and another was wounded in a convoy attack on Wednesday near Balad, north of Baghdad, the US military said.

The attack will raise the official Pentagon US death toll to at least 1,002, including three civilian Department of Defence employees, since the invasion to topple Saddam Hussein.

US casualties stemming from guerrilla attacks are making a mark on the US presidential election campaign.

John Kerry, Democratic challenger to President George W. Bush in the US presidential election in November, said: "Today marks a tragic milestone in the war in Iraq."

Kerry has tried to make Iraq a major campaign issue. "Of all the wrong choices that President Bush has made, the most catastrophic choice is the mess that he has made in Iraq," Kerry told a town hall meeting in Greensboro, North Carolina.

Bush, campaigning in Missouri, hit back: "No matter how many times Senator Kerry flip-flops, we were right to make America safer by removing Saddam Hussein from power."

As well as the 1,002 dead - three-quarters of them in combat - nearly 7,000 US troops have been wounded since the US-led invasion in March last year.

In one of the most chilling abductions in a country gripped by a wave of kidnappings, two Italian women aid workers and two Iraqis were snatched in broad daylight in central Baghdad.

Italy has about 2,700 troops, the third largest contingent, serving with US-led forces in Iraq, Prime Minister Silvio Berlusconi's pro-US government has refused to bow to guerrilla demands to withdraw.

Since April, foreigners from more than two dozen countries have been kidnapped as guerrillas try to force foreign troops and firms to leave. More than 20 foreign civilians have been killed.

The latest abductions are likely to fuel uncertainty over the fate of two French journalists, Christian Chesnot and Georges Malbrunot, who are still held hostage despite intense diplomatic efforts to free them.

In his report to the UN Security Council in New York, Annan said the security environment in Iraq had not improved much since the US-led invasion in March 2003.

"In addition to severely disrupting everyday life for Iraqis, the ongoing violence could undermine confidence in the transitional political process, making it more difficult to create the conditions necessary for the holding of elections in January 2005," Annan said.

(Agencies via Xinhua)