At least eight people, all from the same family, have been killed by a car bomb in the city of Kirkuk.

Police said the blast occurred near the home of a leader of the Awakening Council, a Sunni militia now working with the US military in Iraq.

Major-General Jamal Taher Bakr, Kirkuk's police chief, said a displaced family from the Diyala province had been taking refuge in the house when it was hit.

The car, loaded with explosives, had been parked in the yard of the house, suggesting it was being prepared for use in an attack and exploded prematurely.

Police and hospital sources said at least two people were hurt in the blast, which caused a whole building to collapse.

At least one woman and a child were among the dead.

Abdul Rahman Mustafa, the governor of Kirkuk province, said: "What are these children and women guilty of that they should be targeted? The aim of such terror attacks is to ignite strife in Kirkuk."

Arabs, Turkmen and Kurds are competing for power in the oil-rich city of Kirkuk, 290km north of the capital, Baghdad.

The majority Kurds want to incorporate the area into their autonomous northern region, while other groups want it to remain under central government control.