At least 12 protesters have reportedly been shot dead and hundreds of others injured on Monday after supporters of Muqtada al-Sadr stormed Iraq's government palace shortly after the influential Shiite cleric announced he was withdrawing from politics.

Shots were fired in Baghdad's fortified Green Zone that houses government buildings, as well as diplomatic missions, an Agence France-Presse (AFP) correspondent said, as tensions soared amid an escalating political crisis that has left Iraq without a new government, prime minister or president for months.

Medics told AFP that 12 al-Sadr supporters had been shot dead and 270 other protesters were hurt – some with bullet wounds and others suffering tear gas inhalation.

Witnesses said earlier that al-Sadr loyalists and supporters of a rival Shiite bloc, the pro-Iran Coordination Framework, had exchanged fire.

Meanwhile, al-Sadr was later on Monday said to have announced a hunger strike until the violence and use of weapons stops, Iraq's state news agency INA and state TV reported.

There was no immediate confirmation from the cleric's office.

Angry protestors stormed the Republican Palace, a key meeting place inside the Green Zone for Iraqi heads of state and foreign dignitaries, for the first time. On July 30, they stormed the parliament building to deter al-Sadr's rivals from forming a government.

Iraq's military swiftly announced a city-wide curfew for civilians and vehicles on Monday to quell rising tensions and the possibility of clashes.

Supporters of al-Sadr filled lavish waiting rooms in the palace and chanted slogans in support of the cleric.

Al-Sadr said earlier Monday he was quitting politics and closing his institutions in response to an intractable political deadlock, a decision that could fuel instability.

"I've decided not to meddle in political affairs. I therefore announce now my definitive retirement," said al-Sadr, a longtime player in the war-torn country's political scene, though he himself has never directly been in government.

He made the announcement on Twitter, where he added that "all the institutions" linked to his Sadrist movement will be closed, except the mausoleum of his father, assassinated in 1999, and other heritage facilities.

His latest statement came two days after he said "all parties" including his own should give up government positions in order to help resolve the monthslong political crisis.

Since legislative elections in October last year, political deadlock has left the country without a new government, prime minister or president, due to disagreement between factions over forming a coalition.

His bloc emerged from last year's election as the biggest, with 73 seats, but short of a majority. In June, his lawmakers quit in a bid to break the logjam, which led to a rival Shiite bloc, the pro-Iran Coordination Framework, becoming the largest in the legislature.

Since then, al-Sadr has engaged in other pressure tactics, including a mass prayer by tens of thousands of his followers on Aug. 5.

Millions of followers

His supporters have been calling for parliament to be dissolved and for new elections, but on Saturday he said it is "more important" that "all parties and figures who have been part of the political process" since the 2003 U.S.-led invasion "no longer participate."

"That includes the Sadrist movement," he said, adding that he was willing to sign an agreement to that effect "within 72 hours."

The gray-bearded preacher has millions of devoted followers and once led a militia against American and Iraqi government forces, following the toppling of dictator Saddam Hussein in the invasion.

Over the years, the chameleon-like figure has taken various positions and then reversed them.

Al-Sadr's supporters have for weeks been staging a sit-in outside Iraq's parliament, after initially storming the legislature's interior on July 30, to press their demands.

They were angered after the Coordination Framework nominated a candidate they saw as unacceptable for prime minister.

The framework wants a new head of government to be appointed before any new polls are held.

Caretaker Prime Minister Mustafa al-Kadhimi earlier this month convened crisis talks with party leaders, but the Sadrists boycotted.

Iraqis say the political infighting has nothing to do with their day-to-day struggles.

Iraq has been ravaged by decades of conflict and endemic corruption.

Oil-rich but blighted by ailing infrastructure, unemployment, power cuts and crumbling public services, Iraq now also faces water shortages as drought ravages swathes of the country.

As a result of past deals, the Sadrists have representatives at the highest levels of government ministries and have been accused by their opponents of being as corrupt as other political forces.

But supporters of al-Sadr view him as a champion of the anti-corruption fight.