ZAKHO, Iraq (AP) _ A U.S. military intelligence official said Wednesday that Iraqi forces are ''flexing their muscles'' in what could be a bid to prevent allied troops from enlarging their security zone in northern Iraq.

Iraq, for its part, denounced as ''baseless'' U.S. allegations that its anti-aircraft guns had fired on a U.S. Navy plane flying over northern Iraq. The plane was not hit.

To the south, U.S. troops marked a milestone: the last of them crossed over into northern Kuwait. The troops completing the U.S. withdrawal from southern Iraq included elements of the 3rd Armored Division, which had helped defeat Saddam Hussein's armies in the ground war.

The U.S.-led occupation in northern Iraq is aimed at reassuring the Kurdish refugees who fled after Iraqi troops in March crushed their rebellion following the war.

Thousands of Kurdish refugees have been heading home from the mountainous border region, traveling by trucks and buses, in farm wagons and on foot.

Saddam and Kurdish leaders reached an agreement in principle last month on a plan to grant more Kurdish autonomy, and the official Iraqi News Agency said Saddam met Wednesday with Kurdish leader Massoud Barzani. It gave no details about their discussion.

INA said deputy Prime Minister Tariq Aziz and representatives of three other Kurdish rebel factions were also present.

In northern Iraq, the allies have been largely unchallenged by Iraqi forces as they expanded the zone designated as a ''safe haven'' for Iraqi Kurds.

But Maj. William Gawthrop said some Iraqi observation posts have been beefed up near Dohuk, and there were signs that high-quality troops have been moved in just south of the city, apparently ''for the purpose of demonstrating resolve.''

The Iraqis may be ''flexing their muscles'' in order to make sure that the expansion does not continue, said Gawthrop, assistant intelligence officer for Task Force Bravo.

In what could be a related development, U.S. officials in Turkey said Wednesday that an American warplane came under anti-aircraft artillery fire Tuesday night while flying over northern Iraq.

It was the first time U.S. military officials had disclosed an attack on a U.S. aircraft since allied troops crossed into Iraq last month to aid Kurdish refugees.

However, a Defense Department official, speaking on condition of anonymity, said there had been four such incidents previously over northern Iraq. The official was in Bahrain with Defense Secretary Dick Cheney.

U.S. military officers in northern Iraq said the anti-aircraft fire must have come from Iraqi troops. The areas involved in the latest incident are controlled by the Iraqis, and no Kurdish guerrillas were known to operate there, the officers said.

An Information Ministry spokesman summoned reporters in Baghdad to his office and told them: ''All this news is incorrect, untrue, baseless.''

The pilot of the plane reported he came under fire about 20 miles northwest of Mosul and another time about six miles west of Dohuk, according to a statement from the Incirlik base, headquarters of the allied relief operation for the Kurdish refugees. The plane was not damaged and the pilot was not injured, it said.

U.S. aircraft continued on Wednesday to fly over Dohuk, 25 miles south of the Turkish border.

Allied troops on Sunday reached the outskirts of Dohuk but had not yet moved into the city. Military officials were waiting today for a decision from their superiors.

Allied commanders have acknowledged that if their mission of getting the Kurds home is to succeed, they must expand the security zone to include Dohuk.

President Bush, in Washington, told reporters Wednesday that ''I don't want to see us get into a quagmire'' in northern Iraq, but said of the refugee protection effort: ''What we're doing is humanitarian.''

The number of refugees returning to northern Iraq is expected to rise within days when a large-scale military operation, Gallant Provider, begins in earnest. That operation aims to move 200,000 refugees over a few weeks.

The allies' goal is to empty the border camps by June 1, when the mountain creeks usually begin to run dry.

About 5,000 Iraqis a day have been leaving mountain camps along the border with Turkey, State Department deputy spokesman Richard Boucher said Wednesday.

At least 335,000 Iraqis, most Kurds, escaped to the border between Turkey and Iraq, where they faced disease, starvation and cold. An estimated 1.5 million Kurds fled to the Iranian border area to the east.

In Iran, more than 1 million Kurdish refugees encamped in squalid conditions in Iran face a ''major risk'' of cholera and typhoid epidemics, a U.N. official in Tehran said Wednesday.

Numerous confirmed cases of typhoid fever have been reported in the refugee camps, especially in western Bakhtaran province, which hosts the highest number of Iraqi Kurds.

Although there have been no confirmed cases of cholera, the United Nations High Commission for Refugees is sending vaccines to the camps ''in case of an outbreak of cholera that in the present conditions could occur at any time,'' said Marwan Khoury, a spokesman in Tehran. He spoke in a telephone interview.

In related matters:

-The five permanent U.N. Security Council members on Wednesday discussed setting up a compensation fund for for victims of Iraq's invasion of Kuwait. However, no decisions were taken.

-Iraqi Trade Minister Dr. Muhammad Mahdi Salih issued a statement Wednesday saying Iraq was prepared to resume economic ties with foreign nations and wanted to buy foodstuffs from U.S. and European companies provided it can sell oil to pay for the food. A U.N. embargo prohibits all trade with Iraq except for food and other humanitarian goods.

-Iraq on Wednesday issued a pardon for people involved in the rebellion against President Saddam Hussein, but said it was excluding those guilty of rape or premeditated murder.