Columns of thick black smoke rose above the area in the neighbourhood of al-Aadhamiya and gunfire and explosions echoed over the rooftops on Saturday.
US Apache helicopters buzzed overhead.
Circumstances surrounding the deaths of the policemen remain unclear, but they are thought to have been involved in a firefight with armed groups who attacked their station in the al-Aadhamiya district of the city.
An Iraqi journalist in the area, Ziad Badruldin, told Aljazeera that he saw the al-Aadhamiya police station up in flames.
Badruldin, however, also said there are reports that the three were killed when their car was set ablaze near the al-Aadhamiya bridge.
Clashes, the reporter said, had also occurred in Antar Square. Other confrontations occurred in al-Gazaliya, al-Amariya and Haifa Street.
Badruldin said he saw destroyed US vehicles near the Abu Hanifa mosque.
Aljazeera aired video of a US armoured vehicle, believed to be a Hummer, destroyed by armed fighters in the clashes. Its occupants are believed to have been killed, but there has been no comment from US military authorities on the incident.
Another Iraqi journalist Ziad al-Samarrai told Aljazeera that fierce clashes were spreading to other districts of the city including al-Dura.
Nine worshippers were wounded
in the Abu Hanifa mosque attack
"Fighters have pushed their way to streets and roads and are using rocket-propelled grenade launchers. US forces responded with artillery fire."
The fighting came a day after Iraqi troops backed by US soldiers raided a major mosque in al-Aadhamiya and clashed with worshippers.
At least four people were killed in the raid on the Abu Hanifa mosque and nine wounded, the Association of Muslim scholars and witnesses said.
In related incidents, two blasts rocked Baghdad on Saturday morning.
Three people were killed in a
car bomb in Baghdad on Friday
A large plume of grey smoke could be seen rising from the area near the health ministry, after the first explosion occurred just before 8:00am (0455 GMT).
It was unknown what caused the explosion.
A second explosion erupted in the center of Baghdad at around 12:40pm (0940 GMT), according to an AFP correspondent.
The cause of the blast was unknown.
The explosions came a day after a car bomb and clashes in a raid on the Abu Hanifa mosque in the capital killed at least five people, including an Iraqi policeman. Nine more Iraqis died in other attacks across the shattered country.
Aljazeera has also learned that an unknown armed group shot and killed an advisor to the interim Iraqi Ministry of Works and Public Affairs on Saturday in Baghdad.
Dr Amal Abd al-Hamid, her secretary, driver and bodyguard were all killed in the attack in the al-Qadisiyah neighbourhood.
Also on Saturday, five students were detained by Iraqi police at the Technology University of Baghdad. The arrest came in the wake of a demonstration at the university which called for an end to the "massacres and atrocities" committed in Falluja.
US troops blocked roads into Ramadi on Saturday and urged residents through loudspeakers in the south of the Iraqi city to stay in their homes and hand over "terrorists", local witnesses said.
US forces are not allowing anyone
to enter or leave Ramadi
They said US forces were not allowing anyone to enter or leave Ramadi, 110km west of Baghdad, and were searching buildings in southern neighbourhoods while helicopters circled overhead.
Anti-American fighters have clashed daily with US-led troops in Ramadi since they launched a full-scale offensive on the nearby city of Falluja, just to the east, about 12 days ago.