BAGHDAD (Reuters) - Iraqi Shi'ite cleric Moqtada al-Sadr pulled back from confrontation with the government on Friday, asking his followers to continue to observe a shaky ceasefire and not to do battle with government troops.

"You are the best who committed and were patient with the decision to cease fire, and were the most obedient to your leader," said a statement from Sadr, read out by a cleric during Friday prayers at a major mosque in Sadr's eastern Baghdad stronghold, the Sadr City slum.

"I wish you would continue your patience and your belief."

Sadr's Mehdi Army militia members have been battling U.S. and government forces since Prime Minister Nuri al-Maliki launched a crackdown against them in the southern city of Basra a month ago. Although Basra has since become quieter, fighting has continued in and around Sadr City.

The statement comes less than a week after Sadr threatened to launch an "open war until liberation" if attacks on his followers by U.S.-backed government troops did not cease.

But in Friday's announcement he said he was referring only to battles with the Americans, not with Iraqi troops.

"When we threatened 'open war' we meant a war against the occupier, not a war against our Iraqi brothers," it said.

"My brothers in the Mehdi Army and the Iraqi forces, be a single hand and stop shedding each other's blood. Support all types of resistance in order to have a safe Iraq."

(Reporting by Wisam Mohammed; writing by Peter Graff; editing by Dean Yates)