The protest on Sunday was over the poor state of water and power supplies.
Witnesses said police opened fire on the crowd.
At least one person was killed and 46 civilians injured in the fighting, said Captain Hussein Manwar. Thirteen police officers were injured, he said.
Witnesses said the demonstration in front of the governor's offices began peacefully, but when it grew larger, government security guards fired shots into the air to disperse the crowd.
Clashes with police began after demonstrators threw rocks
and attacked a police vehicle, setting it on fire, witnesses said.
Iraq's new Shia-led government took power in January elections promising to end violence and restore public services. But frustrations are running high with electricity shortages and high unemployment.
Samawah, 370km southeast of Baghdad, is where about 600 Japanese troops are based.
They have been involved in a series of reconstruction efforts
since arriving in the area in January 2004, including paving roads, rebuilding schools and providing hospitals with medical supplies and equipment.
Elsewhere, a roadside bomb killed two US soldiers and injured three others in central Iraq, while in southern Baghdad three Iraqi soldiers were killed.
A US patrol with Task Force Liberty was hit at about 6pm on Saturday in the city of Samarra, about 95km north of Baghdad, the US military said.
Two US soldiers were killed in
the city of Samarra
All the soldiers were transported to a medical facility, where two of them died from wounds suffered in the attack, a statement said.
On Sunday, three Iraqi soldiers were killed in a drive-by shooting in southern Baghdad, hospital officials said.
The soldiers, who were in civilian clothing, were gunned down as they were heading to work, said Dr Muhammad Jawad of Yarmuk hospital.
A fourth soldier was injured in the morning attack in the southern neighbourhood of Saydida, he added.
Officials shot dead
Also on Sunday, armed men killed two employees of Iraq's Ministry of Oil and wounded two others, police said.
The assailants opened fire on their car in the New Baghdad district of the capital.
Iraqi oil pipelines and officials
often have been targeted
Armed groups have assassinated scores of government officials and ministry employees in an effort to topple the fledgling government.
They also frequently blow up pipelines, depriving the government of millions of dollars of crude oil revenues.
US troop reduction
Meanwhile, in a classified briefing to senior Pentagon officials last month, the top American commander in the Middle East outlined a plan that would gradually reduce US forces in Iraq by perhaps 20,000 to 30,000 troops by next spring, The New York Times reported on its website late on Saturday.
Citing unnamed senior military officers and Defence Department officials, the newspaper said the assessment by General John Abizaid, head of the US Central Command, followed a statement made last week by the top American soldier in Iraq, General George Casey.
General John Abizaid assessed
US troop levels in Iraq
Casey said the Pentagon could make "some fairly substantial reductions" in troops by next spring and summer, if the political process in Iraq remained on track and Iraqi forces assumed more responsibility for securing the country.
Together, the generals' appraisals offer some of the most concrete indications yet that the Pentagon is moving towards reducing US forces in Iraq, the report said.
They also reflect the Bush administration's growing concerns over how the country's involvement in Iraq is influencing domestic considerations.
Increase before polls
In his assessment, given as part of a larger regional analysis, Abizaid also warned that it was possible that the Pentagon might have to keep the current levels of about 138,000 American soldiers in Iraq throughout 2006 if security and political trends were unfavourable for a withdrawal, The Times said.
The number of soldiers will temporarily increase this December to provide security for Iraqi elections.
And some troops leaving Iraq could be held in Kuwait as a reserve force, the paper added.
It said senior administration and Pentagon officials, as well as political leaders in both parties, say there is mounting anxiety over the $5-billion-a-month cost of the war.
There are also concerns about an overtaxed military, dismal recruiting in the army and national guard, dwindling public support for the operation, and a steadily growing number of casualties.