At least five people have been killed and 28 others injured after a roadside bomb exploded in Iraq's capital.

The explosion occurred near a funeral service in Sadr City on Wednesday, a district located in the north of Baghdad.

Police officials, who expect the death toll to rise, said the bomb was hidden in a plastic bag near a tent being used for the funeral commemorating the wife of a Shia Bani Tamim tribal leader.

Only men were in the tent while female mourners were in a nearby house.

The killings come just two weeks after US troops withdrew from Iraq's urban centres as part of a security pact between Baghdad and Washington that calls on American forces to leave Iraq by the end of 2011.

Violence had dropped markedly throughout the country in recent months, but attacks increased in the run-up to the US military's urban pullout, with at least 430 Iraqis killed in June, the highest death toll in 11 months.