Medical sources at the town's hospital, west of Baghdad, said five others were seriously wounded on Tuesday, reported Aljazeera's correspondent.
The demonstrators were protesting against US conduct, including increased civilian arrests. They were particularly angered by the detention of women, who were accused by soldiers of carrying out resistance attacks against them.
The protest was organised by local clerics. Protesters chanted slogans condemning US forces and demanded detainees should be freed, reported the correspondent.
But Reuters reported that four civilians were killed, including an elderly woman, when US soldiers opened fire for coming under rocket attack.
More protesters injured
Also on Tuesday, seven Iraqis were wounded when US-led occupation soldiers clashed with a crowd of jobless protesters in the southern city of Kut.
"Seven wounded were admitted to the emergency room - five protesters and two female bystanders," said Dr Taha Ali Abdel
Husayn. Six people suffered bullet wounds, including one woman.
About 100 protesters threw grenades towards Ukrainian soldiers stationed around city hall offices. In return, the soldiers fired warning shots to disperse the mob, said an AFP correspondent.
In the capital, US soldiers opened fire at a car, killing the driver and a 10-year-old boy, moments after a US army vehicle was hit by a roadside bomb, said relatives.
"The Americans have ruined an innocent family, children and women"
Iraqi relative of civilians killed
One soldier was killed in the Monday bombing, the US military said. The shooting is the latest in a growing number of cases of civilians being shot by US soldiers, as they near the end of their tour before the first troop rotation next month.
A US military official said the shooting "has not been confirmed" and the army was investigating.
Monday's shooting in Baghdad occurred on Palestine Street, near the oil ministry when the car passed two Humvees on a patrol, said Wijdan Abd al-Wahhab, whose two sisters, two nephews and a niece were in the car.
As the vehicle passed the convoy, one of the Humvees was hit by the roadside bomb and the other Humvee opened indiscriminate fire, Abd al-Wahhab said.
She said her nephew Mustafa Jamal Shaikhly, 10, and the family driver, identified only as Haidar, were killed in the firing. Mustafa's mother, Istabraq, 30, and aunt Hiyam, 40, were seriously injured.
"The Americans have ruined an innocent family, children and women," a distraught and weeping Wijdan said at the hospital. "They did not even bother to look back at them after shooting them," she said.
In related news, a US Apache helicopter crashed west of Baghdad, but both crew members survived.
The helicopter hit is the third
such attack in three weeks
The helicopter, which usually carries a crew of two, crashed near the town of Habbaniya, about 80km west of the capital, said a US military spokesman.
"There is an initial report of enemy fire," said a military spokesman.
That would make it the third such attack in two weeks.
The spokesman said both crew members were alive, but he did not know if they were injured.
On 9 January, nine US soldiers were killed when their Blackhawk helicopter was shot down in Falluja.
In November, 17 US soldiers were killed when two Black Hawks collided near the northern city of Mosul after they came under attack.