Adnan Sharifi, deputy governor of the city, about 275km south of Baghdad confirmed 20 people were wounded when a shell hit the Haraj market in the city centre on Sunday. This occurred as Iraqi fighters and Italian troops continued to trade fire in the southern city.
Spokesman for Italian soldiers in Iraq, Major Antonio Sotilli confirmed to Aljazeera that some of his troops had been injured during the clashes.
"Those sides have also opened fire at us from the civilian hospital in the city but we have not responded to the fire," Major Sotilli said.
Aljazeera's correspondent reported earlier that clashes erupted on Sunday between supporters of the Shia leader Muqtada al-Sadr and Italian troops as they attempted to cross the al-Nasir and al-Zaitun bridges. Hospital sources told Aljazeera two Iraqis had been killed and more than 20 citizens injured in the clashes.
On Saturday, 13 civilians and journalists were evacuated to the Italian base from the local headquarters of the US-led occupation as it came under fire, said an Italian military spokesman, Lieutenant Colonel Giuseppe Perrone.
He added "some Italian soldiers" were wounded in the operation.
Basra mortar blast
Earlier on Sunday, four Iraqi civilians including two-year old twins were killed after a mortar shell landed on a house near a British military base in the southern city of Basra.
Families buried relatives killed in
clashes in and outside Najaf
The owner of the house, Adil Ibrahim, lost his wife, mother and his twin daughters. Another three daughters as well as his sister were injured.
The blast occurred in Shatt al-Arab district, near a British base at Basra airport. Fighters loyal to Shia leader Muqtada al-Sadr have fought intense battles this week with soldiers of the US-led occupation in Baghdad and several cities in southern Iraq.
Also on Sunday, at least one fighter loyal to al-Sadr was killed in fresh clashes with US occupation troops in Karbala.
As many as 10 American tanks took up positions in the town centre on Sunday, close to some of the shrines holiest to Shia Muslims, returning fire from fighters of al-Sadr's Mahdi Army, who launched mortar rounds and rocket-propelled grenades. US helicopters hovered overhead.
US tanks briefly re-entered
Karbala on Sunday
The director of Karbala's main hospital, Salih Hisnawi, told Reuters one fighter had been brought in dead and three wounded during fighting that broke out at about 7am (0300 GMT), shortly after dawn.
In the city of Najaf, 50km to the south, there was relative calm as locals buried some of the 20 fighters killed in clashes with British troops on Saturday.
Locals also began inspecting their shops and assessing the damage to buildings caused during heavy battles between al-Sadr supporters and US occupation troops.
On Friday, however, tanks stormed on to holy ground in Najaf's sprawling ancient cemetery and clashes took place close to Karbala's main shrines.
The occupation is trying to disband al-Sadr's army and sideline its leadership before handing power to a new Iraqi government on 30 June. Al-Sadr is a fierce opponent of the occupation.
Early on Sunday, a female Iraqi translator working with US occupation troops was killed and another was critically injured when gunmen broke into their houses in Mahmudiyah, said Daud al-Tai, director of the city's hospital.