Iranians were preparing on Thursday to bury their slain leader Ali Khamenei in his hometown of Mashhad in northeast Iran, as new US strikes threatened to trigger a fresh escalation in the Middle East war.

The late supreme leader's burial follows a multi-day funeral ceremony that attracted millions of mourners across various cities in both Iran and Iraq.

But just as the funeral rites headed into their final day, the United States launched new strikes on Iran in retaliation for attacks on shipping in the vital Strait of Hormuz.

President Donald Trump, who had earlier said the US ceasefire with Iran was over, warned of "much worse" to come if Iran continues to strike vessels in the strait.

Khamenei was killed on February 28, the first day of the US-Israeli strikes that started the war.

Following a marathon procession through the holy cities of Najaf and Karbala in neighbouring Iraq on Wednesday, he was to reach his final place of rest in the holy city of Mashhad.

Observers have been watching closely for any signs of Khamenei's son and successor Mojtaba Khamenei, who has yet to make any public appearances and was said to have been injured in the same strike that killed his father.

Mashhad governor Hassan Hosseini was quoted on state television as saying he "expects 15 million people" to attend Khamenei's funeral.

The funeral was originally set to begin on Thursday at 6:00 am (0230 GMT), but local media later cited organisers as saying it would begin at 2:00 pm because ceremonies in Iraq had run late.

According to the official IRNA news agency, Khamenei is to be buried Thursday evening in the Shrine of Imam Reza -- Iran's most revered place of worship. Imam Reza is the only one of the 12 Shia imams buried in Iran.

Khamenei's funeral ceremonies included a series of locations that reflect the religious, political and ideological pillars of the Islamic republic.

His chief of staff, Mohammad Mohammadi-Golpaygani, had previously said on state television that Khamenei himself had wished to be buried in Mashhad.

Several notable figures have been buried in the shrine over the centuries, including several former Iranian shahs, as well as former president Ebrahim Raisi.

Massive crowds
The ceremony has so far drawn massive crowds of people across various cities, starting with Khamenei's three days of laying in state in the capital Tehran.

The Islamic republic hopes the ceremony will project strength and unity following the Middle East war, and six months after a crackdown on anti-government protests.

Khamenei, who had ruled Iran since 1989, was killed aged 86 along with several members of his family and top officials in an Israeli strike.

After five weeks of intense hostilities, a fragile ceasefire and an initial accord with the US sought to put the Middle East conflict on hold.

But the ceasefire looked increasingly threatened as US Central Command said it had carried out strikes to degrade the ability of Iranian forces "to threaten freedom of navigation" in the Strait of Hormuz -- a key bone of contention in US-Iran talks.

Calls for restraint abounded as US forces struck multiple sites on Iran's coast in response to Iranian attacks on three ships in the waterway.

Tehran earlier said it had struck US bases in Bahrain and Kuwait.

Following ceremonies in Tehran, Khamenei's remains were transported on Tuesday to the clerical city of Qom, then Wednesday to neighbouring Iraq, before his burial on Thursday.

He will be buried with his infant granddaughter, son-in-law, daughter and Mojtaba Khamenei's wife Zahra Haddad Adel, who were all killed in the February 28 strikes.