Protesters vowed to do everything to force the council's resignation, reported our correspondent in the city, about 300 km southeast of Baghdad.
Islamist parties in the city had urged citizens to demonstrate against the council, saying the group represented American and not Iraqi interests.
The US occupying administration has appointed local councils in some Iraqi cities since ousting former Iraqi President Saddam Hussein on 9 April.
Some Iraqis believe these councils do not represent the interests of local citizens. Local occupying administrators have veto power over the councils' decisions.