The fresh hostility is seen as an acid test for the special security squad launched by the Iraqi Government to sweep off insurgents from Baghdad.

Iraq had on Sunday launched a 40,000-man security strike force under Operation Lightning to end the reign of terror, which the fighters had unleashed on both civilians and security personnel since the country's January 30 elections, which some parties boycotted.

In the dual suicide bomb attacks in the mainly Shia town of Hilla, 95km (60 miles) south of Baghdad, officials say that 27 people were killed.

Police said the bombers mingled with a crowd of policemen protesting against a decision to disband their unit.

One bomber detonated his charge in the middle of the crowd, the reports said.

A second blew himself up about a minute later, as people fled the first bombing. Al-Qaeda in Iraq claimed the attacks via the Internet.

The scene of the blasts, covered in pools of blood and scattered with remains of clothes and shoes, was immediately cordoned off.

"We have 27 people killed and 128 wounded," an Interior Ministry source told the Agence French Presse (AFP) news agency. Hilla policeman Jiwad Kadhim Hamid told Associated Press: "The first explosion occurred in the middle of the demonstration in front of the mayor's office, and the second one took place less than one minute later and about 100 metres away from the first one, just near to the demonstration.

"Then I just saw a ball of fire and flying pieces of flesh. After that, confused policemen started firing into the air."

Mr. Hamid's party boycotted the elections in January

Separately, a top Sunni politician was arrested and then released by United States (U.S.) forces, who said they had made a mistake.

Mohsen Abdul Hamid, leader of the Iraqi Islamic Party - one of Iraq's main Sunni parties, which boycotted elections in January - was taken from his home in the early morning, angering his supporters.

The arrest was immediately condemned by Iraqi President Jalal Talabani, who expressed his "surprise and unhappiness", saying: "Treating a political personality of this level in such an arbitrary way is unacceptable."

The America military said in a statement: "Following an interview it was determined that he was detained by mistake and should be released... Coalition forces regret any inconvenience and acknowledge Mr. Hamid's co-operation in resolving this matter."

On Sunday night, at least 16 people were killed in suicide attacks in and around Baghdad in what appeared to be a reaction to a major crackdown on insurgents.

The massive Operation Lightning, aimed at securing Baghdad, involves dividing the city into sectors and setting up hundreds of checkpoints.

The operation, which will soon be extended to other provinces, should make it impossible for terrorists to move freely, Iraqi Defence Minister Saadoun al-Dulaimi said on Thursday last week.

A statement published on the Internet said the security plan was futile and claimed the Baghdad attacks on behalf of a group purportedly led by Jordanian militant Abu Musab al-Zarqawi.

Criticism of the operation was also voiced by Mr. Hamid's party, which warned it could lead to more retaliatory attacks.

Some 700 Iraqis and 70 U.S. soldiers have been killed since the new government took office last month.