The Mahdi Army, which is the Shiite militia group blamed for much of the sectarian violence in Iraq, has taken several measures to alleviate the impact of a possible attack by U.S. forces.
The United States is sending thousands more troops to Baghdad as part of a new strategy to pacify the restive city.
American and Iraqi troops have so far failed to subdue the city, where nearly six million people are virtual hostages of murderous militias, gangs and other violent groups.
As it plans the deployment of its own troops to Baghdad's streets and districts for extended periods of time, the U.S.-backed government says it is hopeful that this new campaign will succeed.
Baghdad has been divided into separate military-controlled zones in coordination with U.S. commanders. Iraqi forces, backed by American Marines, will try to flush out the armed groups and ensure that they never return.
The Mahdi Army militia is heavily armed and wields tremendous power in Baghdad, particularly in Shiite-dominated areas.
Shiite cleric Moqtada al-Sadr, who controls the Mahdi Army, is well aware U.S. determination to curtail the power of his forces, is said to have ordered his men not hide their weapons but to refrain from fighting once the American campaign begins in earnest.
Al-Sadr's power base is centered on Sadr City, a sprawling Shiite township of over two million people.
Mahdi Army commanders are reported to have held a meeting recently to flesh out a strategy to counter the imminent American military campaign.
As part of a strategy to preserve their weapons and power in preparation for the post-U.S. era, the commanders had orders not to resist American forces.
Al-Sadr, who is the Mahdi Army's top commander, is reported to have instructed the militias to behave in a manner that will not lead to the loss of, "even a single Mahdi Army member."
Analysts say that Al-Sadr is keen to remain a force to reckon with after U.S. troops withdraw; something that he believes could take place by the end of this year.
The Mahdi Army has infiltrated Iraq's new army and police, and Al-Sadr's political movement is a major force within the governing Shiite-dominated coalition.
Sources say that Prime Minister Nouri al-Maliki is trying to resist American pressure to battle the Shiite militias in the streets of Baghdad.
Maliki would also like additional U.S. forces to be sent to the restive provinces of Anbar, Diyala and Mosul, which are major strongholds for anti-American rebels.