Mohammed al-Askari, the defence ministry spokesman, said "the committee has managed to get the six people detained by the Americans released".

Security row

Al-Maliki has demanded that US forces hand over those responsible for the attack to the courts, an Iraqi official said.

"We condemn this horrific incident. It violates the agreements between US forces and the Iraqi government"

Latif al-Tarfa, governor of Wasit province

Under the US-Iraqi security pact, which came into force this year, the 137,000 US troops in Iraq are no longer allowed to conduct military operations without Iraqi approval and co-ordination.

It also says that US soldiers are immune to prosecution in Iraqi courts unless they are suspected of grave crimes committed while off duty outside their bases.

The US military said that the operation was undertaken within the framework of the security pact and that "the operation was fully co-ordinated and approved by the Iraqi government".

The row marks the most serious test of the security pact so far.

But efforts were quickly launched in an attempt to tone down the dispute, and Colonel Richard Francey, from the US military, offered condolences to the family of the woman killed.

'Horrific incident'

Baghdad's condemnation of the raid came after hundreds of Iraqis protested in Kut against the US operation.

Hundreds of protesters shouted angry slogans as they carried two coffins through the streets of Kut.

"We condemn this horrific incident. It violates the agreements between US forces and the Iraqi government," Latif al-Tarfa, governor of Wasit province, said.

"Innocent people were killed and the city is now very tense."

Aziz al-Amara, an Iraqi police officer, who commands a rapid reaction force in Kut, said all of those targeted in the raid were innocent and that one of those arrested was a police captain.

"They were poor people. They do not cause any political or security problems," he said.

Officials arrested

The Iraqi defence ministry ordered the arrest of two high-ranking Iraqi officers for their alleged roles in allowing US forces to operate in Kut.

It also sent a committee to Kut to investigate.

The raid came just months before US combat troops are due to withdraw from Iraqi cities.

Barack Obama, the US president, has ordered all US combat operations in Iraq to cease in August 2010 ahead of the full withdrawal by the end of 2011.

Kut, and the surrounding Wasit province, were the last area south of Baghdad to be handed over to Iraqi forces last October.