An Iraqi policeman said American troops shot dead the protesters late on Sunday in the northern city of Kirkuk.
He said the pair were killed and eight other demonstrators were hurt after US soldiers opened fire on a group they claimed was about to riot.
In the capital Baghdad on Monday, a crowd of 150 former conscripts vowed to remain outside an occupation force compound until they received a one-off payment of $40.
“We will be here every day until they pay us,” said Hamza Mahdi, 23, who has been trying to collect his desperately needed pay since 18 September.
At least six US soldiers stormed across the street towards the protesters and began shoving them.
In front of the compound gates, six elderly women demanded to know when they would be paid pensions for the loss of their husbands and sons, killed fighting in the 1980 to 1988 Iran-Iraq war.
Occupation has yet to deliver
promises made since invasion
On Sunday, British troops opened fire at demonstrators in the southern city of Basra. The army veterans were told the cash they were waiting for would not be shelled out at this stage.
However, a British military spokesman on Monday in Basra said the situation in the city was quiet.
Since US occupying administrator Paul Bremer sacked Iraq’s army in May, tens of thousands of people have been waiting for their compensation pay.
In other developments, mortar rounds were fired at occupation troops stationed outside the city of Karbala, about 100km southwest of the capital, without causing casualties.
Polish military officials said the attack took place against Camp Kilo. The assailants fled before soldiers could detain them.
Occupation forces face daily deadly resistance attacks.
Meanwhile, the US military said it had shut down Camp Cropper, a notorious makeshift prison facility at Baghdad Airport where hundreds of Iraqis were held in tents.
Human rights groups, including Amnesty International, described treatment of Iraqi detainees at the camp, where prisoners were held in scorching summer temperatures as degrading.
Protests continue across Iraq for
third consecutive day
Occupation officials said prisoners were moved to “superior facilities” and most were transferred to Baghdad central prison.
In related news, Aljazeera cameraman Salah Hasan continues to be detained in Baghdad, despite intense efforts to secure his release.
Hasan was arrested last Friday in al-Mukdadiya, east of Baghdad.
Hasan, speaking from detention, said he was filming a protest of unemployed Iraqis when Iraqi policemen arrested him.
Police told Hasan's lawyer that he was arrested on the orders of US occupation forces.