NAJAF, Iraq, Dec 20 (Reuters) - Iraqi soldiers bit the heads off frogs and ate the heart of a rabbit as signs of courage on Wednesday at a ceremony to transfer Najaf province, home to one of Shi'ite Islam's holiest shrines, from U.S. to Iraqi control.

A U.S. general called the transfer, under a plan to gradually hand over security and allow the withdrawal of 135,000 American troops, a major step in strengthening the Iraqi government as it seeks to stop sectarian violence.

Prime Minister Nuri al-Maliki has said Iraqis can take control of all Iraq's 18 provinces by June, despite doubts about capabilities and the sectarian loyalties of the army and police.

The province has been spared much of the violence, but its capital Najaf is the scene of a power struggle between two powerful Shi'ite militias vying for control of the holy city, the seat of Iraq's most influential Shi'ite clerics.

To guard against attacks, Iraqi authorities imposed a vehicle ban in the city, where the handover ceremony took place in a football stadium amid tight security.

Politicians, tribal and religious leaders and soldiers watched displays of military prowess and one demonstration, hailed as a display of courage, in which five soldiers stopped before the grandstand to bite the heads off frogs.

A sixth holding a live rabbit slit open its stomach and ate its heart before tossing the carcass to his comrades to chew on.

Under Saddam Hussein's rule, his feared Fedayeen militia carried out similar acts, and in one instance were videoed hunting a fox and then tearing it apart with their teeth.

Troops paraded round in shining new vehicles decked with pink ribbons and flowers, but Iraq's Deputy Chief of Staff, Lieutenant General Nasier Abadi, conceded there were problems with procuring equipment and setting up supply lines, for which the Iraqi forces still depend largely on U.S. support.

One soldier, Corporal Ali Abdul Hasan, said the army needed everything from helicopters to guns. "Some vehicles arrived with parts missing and we have old weapons. They didn't even give us pistols," he said.

HANDOVER SYMBOLIC

The handover was largely symbolic since U.S. forces have rarely ventured into the holy city, home to the shrine of Imam Ali, whose death in the 7th century caused the great schism in Islam between Shias and Sunnis.

The province has effectively been under Iraqi security control for some time because of religious sensitivities. But its status means success there will be crucial.

"It is a major step forward in improving security and strengthening the authority of the government," said U.S. Major General Kurt Cichowski.

Najaf is the third province to be transferred to Iraqi control. Three more in the Kurdish north of Iraq are due to be handed over this month.

With a few major exceptions, Najaf, home to Iraq's most senior cleric, Grand Ayatollah Ali al-Sistani, has been spared much of the violence rocking Baghdad and other areas where Shi'ites, Sunni Arabs and ethnic Kurds live side by side.

Najaf saw an uprising by the Mehdi Army, a militia loyal to cleric Moqtada al-Sadr, against U.S. forces in August 2004.

A think-tank report warned on Tuesday of tensions between the Mehdi Army and the Badr Brigades, a militia loyal to the powerful Supreme Council for Islamic Revolution in Iraq.

(Additional reporting by Khaled Farhan)