The offices of the Patriotic Union of Kurdistan (PUK) are close to Iraq's Foreign Ministry and an entrance to the "Green Zone" compound where the US-led administration in Iraq is based. Shots rang out on Tuesday after the explosion in which 25 Iraqis were killed.
Sattar Jabar, a policeman at the scene, said he had seen at least 25 bodies, adding that more than 20 other people had been wounded.
A huge crater was blown into the ground at the entrance to the building. The blast came as US and Iraqi officials announced the names of an interim Iraqi government, due to formally take over 'sovereignty' from the occupying powers on 30 June.
In another incident on Tuesday, eleven Iraqi civilians were killed in a car bomb explosion outside a US military base in the northern town of Bayji, a senior Iraqi security official said.
"The accident happened at 9:30 am (05:30 GMT) this morning when a black BMW with a bearded man inside blew up, setting fire to several other cars in the area," said Lieutenant Hamid Masud of the US-trained Iraqi Civil Defence Corps (ICDC).
"I was standing at the gate of the military base when a black BMW blew up right by a US Humvee. I'm sure all the soldiers inside were killed. Then
Amr Abid Ismail,
an Iraqi contractor
He said another 26 people, including two ICDC members, were wounded in the blast in Bayji, some 35km north of ousted Iraqi leader Saddam Hussein's hometown of Tikrit.
Amr Abid Ismail, an Iraqi contractor who works at the military
base in Bayji, was lightly wounded in the explosion.
"I was standing at the gate of the military base when a black
BMW blew up right by a US Humvee. I'm sure all the soldiers inside were killed. Then I fainted," he told reporters.
There was no immediate confirmation of the casualty toll from
the US occupation forces.