In the north of the city, a bomb exploded in a mixed Sunni and Shiite district, killing two civilians, according to a security source

And in Samawa, south of the capital, gunmen murdered two women and a girl from the same Shiite family, in an apparent sectarian attack, police said.

The latest attacks came after a US military spokesman told reporters that attacks by car bombs and roadside booby traps are running at an all-time high, three-and-a-half years after US-led forces overthrew Saddam Hussein.

US casualties are also mounting. Four more soldiers were killed on Wednesday in southwest Baghdad when their unit was attacked by gunfire and mortars.

Since Monday, 14 US soldiers have been killed, mostly in Baghdad, in a spike in casualties that brought the number killed since March 2003 to 2,729, according to an AFP count based on Pentagon figures.

Iraqi and US forces have responded to the violence wracking Baghdad with Operation Together Forward, a joint security plan which has brough 15,000 US troops and more than 40,000 Iraqi soldiers and police onto the streets.

By Monday, they had "cleared approximately 95,000 buildings, 80 mosques and 60 muhallas (small administrative districts), detained more than 125 terrorist suspects, seized more than 1,700 weapons, registered more than 750 weapons and found 35 weapons caches."

"The combined forces have also removed more than 196,921 cubic meters (seven million cubic feet) of trash from the streets of Baghdad," a US statement said.

House-to-house searches have been cut back during the Mulsim holy month of Ramadan, however, and Prime Minister Nuri al-Maliki has been reluctant to allow US troops to raid Sadr City, stronghold of the Shiite Mahdi Army militia.

US intelligence officers believe that Mahdi militiamen, who are nominally loyal to the radical anti-American cleric Moqtada al-Sadr, are linked to the death squads that hunt political and sectarian targets on Baghdad's streets.

Sadr is, however, a powerful figure and his supporters are a key component of Maliki's fragile coalition government.

The loyalty of Iraqi security forces has also been in question, with some Shiite-dominated units accused of collaborating with the militias and death squads fighting a sectarian dirty war which leaves 100 people dead every day.

Iraq on Wednesday demobilised an entire 800-strong police brigade and quarantined them in a US military base where they will receive what a US spokesman said was "anti-militia, anti-sectarian, national unity training".

"There was clear evidence that there was some complicity in allowing death squad elements to move freely, when in fact they were supposed to be impeding their movement," Major General William Caldwell told reporters.

The development of Iraqi security forces is of vital important to President George W. Bush's administration, which has pinned its strategy on training local troops to replace the 142,000 US soldiers in the country.

But the discipline of US forces has also been called into question.

On Wednesday, two US Marines pleaded not guilty to murdering an Iraqi civilian, at a pre-court martial hearing in Camp Pendleton, California.

The charges relate to the death of Hashim Ibrahim Awad on April 26 in Hamdania. Prosecutors allege that a gang of eight US servicemen kidnapped the 52-year-old from his home, shot him dead and planted a rifle near his body.

Major cities like Falluja, Samarra, Mosul, Ramadi, Tal Affar and several others, lying within the so-called Sunni Triangle, have been invaded several times.

Before, during and immediately after these invasions, American and Iraqi officials routinely make big promises to the civilian population. They vow to rebuild the destroyed cities and pay handsomely for casualties and damage. And the local media carry stories on the amounts of money already earmarked for the purpose.

For example, $25 million was allocated to the city of Samarra alone, after a large-scale U.S. invasion of the city in October, 2004. But residents say that while they continue to be bombed, there has been no trace of the money.

Along with two cars, Mr. Abu Rihab had his house destroyed. He estimates the damage at $300,000, but despite four applications for compensation he has so far received nothing.

"U.S. warplanes struck my home, destroyed my house and two cars as well as my store, which sells air-conditioning equipment. I have a right to compensation, since I had nothing to do with the so-called mujahiddeen or resistance," he said.

The neighborhood of al-Jibriya is perhaps among the most affected in Samarra. American bombing of the neighborhood has turned Mohammed Nadeem's life into a tragedy.

"U.S. warplanes bombarded my sister's home. The bombing turned the house into a heap of debris. We had to dig up the corpses of my sister, her husband and three children from the ruins. We have submitted several applications for compensation, but to no avail," Nadeemd said.

Stories like these are the most likely source of the mistrust many Iraqis feel toward the U.S. occupiers. Confidence in America and its occupation forces in the country is at a very low ebb.

But local authorities say that the $25 million allocated for Samarra, most of it part of an American grant, is set aside in the Central Bank and will be released as quickly as possible.

Hussain Jabbara, senior provincial official from Takreet, where Samarra is located, said he recently had a meeting with Iraqi officials and U.S. military officers who confirmed that "appropriate compensation" will be made for those affected in Samarra.

Al-Sadr's military wing, the al-Mahdi Army, is one of Iraq's most powerful and lethal militias. It has already waged two major uprisings against U.S. forces and a number of mutinies against the government.

In the southern city of Diwaniya earlier this month, the al-Mahdi Army easily defeated Iraqi military and police forces. To help regain some semblance of control, the troops had to seek the aid of U.S. forces.

Sadr said his call for compromise and civil resistance was for the sake of sparing Iraqi blood. But nevertheless, he still had some harsh words for the United States.

"I don't think this new attitude will persuade America to give up its tyranny. It is an aggressor country and will remain so. As for me, there will be no letup in my opposition to the occupier," he said.

Sadr's bloc took part in the last parliamentary elections and won 30 of the 275 seats in the National Assembly. His bloc has two ministers in the government as part of the ruling Shiite coalition.

Sadr has a large following among the Shiites in Baghdad and several other cities in southern Iraq.

"I want you to wage a peaceful war against them (Americans). I do not wish to see a single drop of blood shed, because this is very dear to us. Engage them (Americans) in a popular, peaceful and political war," he asked his followers.

However, he said Iraqis should expect nothing but "death and destruction" from the United States.

U.S. troops remained at the scene to inspect the vehicle, examine documents and generally act aggressively toward the passenger that survived the incident. Two Iraqi bystanders tried to apologize to the American troops and clarify the matter, saying that it was merely a traffic accident. But the Americans were unconcerned and wouldn't listen. Then, after spraying the two bystanders with incendiary materiel, the Americans set the two Iraqis alight and departed in their vehicle, leaving the flames to consume their corpses.

It is worth mentioning that the types of vehicle mentioned [GMC Envoys] are used by American security companies in charge of protecting officials, U.S. Army commanders and the contractors working alongside them.

State authorities have said nothing to the press about the accident, and local authorities have taken no action nor have they launched an investigation into what happened. Due to this atrocious behavior and the fact that the incident coincided with the first day of Ramadan, great anger and congestion reigned over this street in Babel this day.

In a separate incident, two policemen were killed today and five injured as a result of mortar shells that fell on the Jurf al Sakhar police station in Qada al Musib, in the north of the Babil Province. The spokesman for the Babil police command said, "Following an attack comprised of about 20 mortar rounds, unknown gunmen attacked with a heavy barrage of small arms fire that left two policemen dead and seven injured." The spokesman added that "American forces clashed with the gunmen, but they escaped."

It is unknown whether this incident was a reaction to the burning of the two citizens.

U.S. forces initially "thought there was a possibility al-Masri was among them," Lt. Col. Barry Johnson said. But he said it did not appear the terror chief was killed.

"We have no reason to believe that we've killed al-Masri," Johnson told the Associated Press. "We are doing DNA testing to completely eliminate the possibility that this would be al-Masri, but we do not believe it is."

The statement came four days after Iraq's national security adviser, Mouwafak al-Rubaie, said U.S. and Iraqi forces were closing in on al-Masri.

But chief U.S. military spokesman Maj. William B. Caldwell was more skeptical on Wednesday.

"I'd love to tell you we're going to get him tonight," he told reporters. "But, obviously, that's a very key, critical target for all of us operating here in Iraq. ... We feel very comfortable that we're continuing to move forward very deliberately in an effort to find him and kill or capture him."

Caldwell said a driver for al-Masri had been captured in a Sept. 28 raid in Baghdad, the second figure close to the al-Qaida in Iraq chief to be captured that month.

"We're obviously gleaning some key critical information from those individuals and others that have been picked up," he said, adding that 110 al-Qaida suspects were killed and 520 detained in September.

Johnson would not say what kind of a DNA sample existed that tests of the body might be compared to, but said "we're confident we will be make a positive I.D., or not, when the time comes."

The process "can take weeks to resolve," Johnson said.

Iraqi government spokesman Ali al-Dabbagh and Defense Ministry spokesman Qassim al-Moussawi expressed even more certainty that the dead man was not al-Masri.

"The body belonged to someone else," said al-Dabbagh, without identifying the slain militant. "The DNA check will be completed" to make sure, he said.

In violence Thursday, a car bomb exploded in the mainly Shiite neighborhood of Hurriyah in Baghdad, killing two people and wounding two more, police 1st Lt. Thaer Mahmoud said.

Another bomb struck a group of laborers waiting for work at a downtown square in the capital, killing two and wounding 26, Mahmoud said.

The province of Diyala, an increasingly violent region north of Baghdad, saw a string of attacks early Thursday. Bombings and shooting in and around the province's capital Baqouba left seven dead. Iraqi officials have warned of increasing al-Qaida presence in Diyala.

Baghdad has been torn by escalating violence over past weeks, a deadly combination of Sunni insurgent attacks and sectarian killings between Shiites and Sunnis. At least 21 U.S. soldiers have been killed since Saturday, most in Baghdad amid a massive security sweep by American and Iraqi forces that has been going on since August.

Iraqi Prime Minister Nouri al-Maliki vowed in comments to Iraqi state TV that the country is in the final stage of "confronting the security challenge" and that security would be achieved "within the two or three months to come."

Caldwell also said Wednesday the number of car bombs and roadside bombs that went off or had been found and defused over the past week was the highest this year. He declined to give firm numbers, but said, "The trend line has been up over the last couple of months."

Amid the escalating violence, Iraqi authorities on Wednesday pulled a brigade of about 700 policemen out of service in its biggest move ever to uproot troops linked to death squads, aiming to signal the government's seriousness in cleansing Baghdad of sectarian violence.

It was the first time the Iraqi government has taken such dramatic action to discipline security forces over possible links to militiamen, though some individual soldiers have been investigated in the past.

Sunnis widely fear the Shiite-led police, especially in Baghdad, accusing them of cooperating with death squads who snatch Sunnis and kill them.

The brigade was responsible for a region of northeast Baghdad with a slight Shiite majority, where gunmen on Sunday kidnapped 24 workers from a frozen food factory. Hours later, the bodies of seven of the workers were found dumped in a district miles away.

Sunni politicians have said all those who were kidnapped were members of the minority sect. They blamed Shiite militias for the abduction and accused police of letting the gunmen escape and move freely with their captives.

Brig. Abdul-Karim Khalaf, the chief spokesman for the Interior Ministry, which oversees the police, said the brigade was being investigated because it "didn't respond quickly" to the kidnapping.

Caldwell said the police brigade in the area had been ordered to stand down and was undergoing retraining. He said some troops were being investigated and that any found to have militia ties would be removed.

"There is clear evidence that there was some complicity in allowing death squad elements to move freely when, in fact, they were supposed to have been impeding their movement," Caldwell said at a news conference.

Al-Masri, whose pseudonym means "the Egyptian," is believed to have taken over al-Qaida in Iraq after Jordanian-born Abu Musab al-Zarqawi was killed June 7 in a U.S. air strike in Diyala province.

Iraqi intelligence knows the militant's real name and has samples of his fingerprints for comparison, said defense spokesman al-Moussawi, who refused to give the real name.

U.S. officials said al-Masri joined an extremist group led by al-Qaida's No. 2 official Ayman al-Zawahri in 1982. He joined al-Qaida training camps in Afghanistan in 1999 and trained as a car bombing expert before traveling to Iraq after the U.S.-led invasion in 2003.

The news from Iraq suggests the party will not be taking place soon. Yesterday, it was reported that 28 people had been killed in a series of bombs and attacks. Among the dead were two US soldiers - bringing to 17 the number of American troops killed since Saturday.

The US casualty toll now stands at more than 2,730, with almost 120 British troops killed. Two years ago a report in The Lancet suggested more than 100,000 Iraqi civilians had been killed.

The Bush administration has repeatedly claimed US soldiers will be withdrawn from Iraq once Iraqi security forces are able to fill their position. But yesterday the Iraqi government suspended a brigade of up to 700 policemen and placed some of them under investigation for suspected "complicity" with death squads.

The police are suspected of involvement with death squads which carried out a series of recent kidnappings and murders. Informed of the $20m that has been set for the "commemoration of success", Nadia McCaffrey, whose son, Patrick, a National Guardsman, was killed in Iraq in 2004, said: "I don't know what to think any more. I think it is totally out of hand. We don't know where we are going."

Ms McCaffrey was among hundreds of protesters who gathered outside the Stockton Memorial Civic Auditorium in California on Tuesday where President Bush told supporters: "When this chapter of history will be written ... it's going to be a comma. The Iraqis voted, comma, and the United States of America understood that Iraq was a central front in the war on terror and helped this young democracy flourish."

The legislation for the celebration, first revealed by The New York Times, empowers the President to designate "a day of celebration" and to "issue a proclamation calling on the people of the United States to observe that day with appropriate ceremonies and activities".