BEIRUT, Lebanon--Iraqi forces, after weeks of street fighting, captured the Iranian port city of Khorramshahr, Iraq's military command said yesterday. Iran's military officials denied the claim, saying that "the enemy's attempts to advance into Khorramshahr were foiled."

Iraq also reported that 60 neutral ships trapped in the Shatt al-Arab waterway by the battle for Khorramshahr are now free to sail under the banner of the International Red Cross (IRC) into the Persian Gulf.

"The Iraqi flag was hoisted over Khorramshahr's government building to declare the return of the city to Arab rule forever," an Iraqi military communique, broadcast by Baghdad Radio, said yesterday, adding that bodies of the city's Iranian defenders were "left in the streets."

An Iranian military academy cadets continued to defend Khorramshahr from Iraqi tank and shelling attacks, Pars, the official Iranian news agency, reported. "Fierce house-to-house battles against the invading forces continue in parts of the city," Iran's Supreme Defense Council said yesterday.

Iraq also claimed the capture of the main bridge linking Khorramshahr with Abadan, nine miles to the south. "Abadan is as good as fallen," the Iraqi communique said.

Iraq first claimed Khorramshahr had fallen four days after the start of the war, only to encounter stiff resistence in the section of the city cut off from the port sector by the Karun River. Iraqi tanks then attacked and encircled the city.

Iran not only foiled Iraqi advance into Khorramshahr but also pushed Iraqi artillery forces back from Ahwaz, the capital of Khuzistan province, Pars reported yesterday. The report also claimed that Iranian ground troops forced Iraqi infantry from the towns of Bostan and Susangerd.