Elsewhere on Monday, Iraqi and US troops with sniffer dogs scoured Baghdad's infamous Haifa Street as part of Operation Lightning, touted as the biggest domestic security operation since former president Saddam Hussein was toppled in 2003.
In the town of al-Hilla, south of Baghdad, two bombers detonated their explosives belts in a crowd of about 500 former police commandos outside local government offices, police said.
"We have 27 people killed and 118 wounded," an Interior Ministry source said.
The policemen had come to collect back-pay in the town, where a bomb in February killed 118 people, the largest single attack since the US-led invasion of March 2003.
The group of al-Qaida's frontman in Iraq, Abu Musab al-Zarqawi, claimed responsibility for the latest attacks in internet statements.
One of the bombers "immersed himself in a crowd of members of Iraqi special forces who were protesting in front of a police station demanding higher salaries ... he blew himself up and Allah annihilated them", the group said.
The attack came as Iraqi authorities pressed on with their operation to halt widespread attacks in and around Baghdad.
The US miltary is trying to quell
a surge of violence in Baghdad
About 700 people have been killed in attacks this month, in a surge of violence that followed the 8 May inauguration of Iraq's first democratically elected post-Saddam government.
Anti-US fighters say the elections were illegitimate, because they were sponsored by a foreign invader.
In Baghdad, US forces acknowledged they had mistakenly detained Iraqi Sunni leader Muhsin Abd al-Hamid.
"This morning coalition forces detained and interviewed Muhsin Abd-al Hamid. Following the interview, it was determined that he was detained by mistake and should be released," a US military statement said.
US military operation
"Coalition forces regret any inconvenience and acknowledge Mr Hamid's cooperation in resolving this matter."
The leader of the Iraq Islamic Party had been hooded and taken from his home along with his three sons before dawn by US troops, according to senior party official Alaa Makki. No reason was given for the detention.
"Abd-al Hamid is now resting at home with his children," Iraq Islamic Party member Nizar Hamdan said.
US authorities released Abd
al-Hamid shortly after his arrest
Iraqi President Jalal Talabani had pressed for Hamid's swift release.
"President Talabani expressed his surprise and unhappiness at the arrest of the leader of the Islamic Party and called for his immediate release," his office said in a statement.
The US military also said on Monday that it had ended a joint US-Iraqi sweep in the northwest of the country around the Euphrates River valley town of Haditha.
Police general killed
"Twelve insurgents were killed and another 30 are being held and questioned," said a statement announcing the end of the "highly successful operation".
The al-Qaida-linked group Ansar al-Sunna, meanwhile, claimed responsibility for the killing of an Iraqi police general who was grabbed from his home in northern Iraq and shot on Sunday.
"The Brigade of Muhammad al-Fateh stormed the house of General Ahmad Saleh al-Baranzanchi, the director of internal affairs at the council of the province of Kirkuk, and killed him," said an internet statement whose authenticity could not be verified.
"They are not going to be successful. They can't be successful. These folks are savages, mass murderers. "
US General Richard Meyers
In Washington, the army's highest ranking officer, General Richard Myers, said the US was determined to defeat Iraqi "insurgents".
"They are not going to be successful. They can't be successful," Meyers, chairman of the Joint Chiefs of Staff, said on NBC television's Today Show progamme on the US annual Memorial Day holiday.
"These folks are savages, mass murderers. The international community should never think about anything but winning the battle against them", he said.
On Monday, about 300 Iraqi soldiers backed by 60 elite US special forces carried out a three-hour sweep on Haifa Street in a search for arms and explosives.
Operation Lightning aims to cut off rebel access to Baghdad, which is to be divided into 22 separate sectors in two areas east and west of the Tigris River.
Once around 675 fixed checkpoints and an un-determined number of flying roadblocks are established, the sectors are to be searched street by street to flush out anti-US fighters.
Defence Minister Saadun al-Dulaimi unveiled the operation on Thursday, saying: "The objective is to pass from a defensive position to an offensive one and to put the capacities of defence and interior ministry forces to the best use."