Ihsan Karim, a financial controler at the ministry, was seriously wounded while his driver and one bodyguard were killed on the spot in the blast as they drove down a main road in Baghdad's western Yarmuk district.

Karim later died from his wounds in hospital. "Ihsan Karim has passed away," said Dr Ussama Fares at the Shahid Adnan hospital which specialises in neurosurgery.

"Seriously injured in the head and foot, he died of a haemorrhage," the doctor explained.

The finance ministry official was deliberately targeted in the attack, said a second bodyguard, Taha Abbas Hussein, 30, who escaped with shrapnel wounds to the leg.

The blast occurred at about 8:00 am (0400 GMT), said an AFP photographer in the area at the time.

Earlier seven people were killed and 17 injured in a US-led military strike on a suspected terrorist hideout and exchange of gunfire in the flashpoint city of Fallujah overnight, hospital sources said yesterday, adding that some of the casualties were women and children.

"Seven dead bodies were transported to the hospital and 17 wounded were admitted, including women and children," said an employee at the registration counter who asked to remain anonymous.

The toll was confirmed by doctor Rafaa Hiad, the head of the hospital in Fallujah, 50km west of Baghdad.

In another incident one soldier from the multinational force patrolling Iraq was killed and two were wounded in a blast yesterday targeting a convoy in the north of the country, a military statement said.

Meanwhile, one US soldier was killed and four others were wounded in a traffic accident near Iraq's border with Kuwait on Wednesday, the US military said yesterday.

The soldier from the 1st Armoured Division died in a single-vehicle crash that happened early evening, the military said.

"The injured soldiers were evacuated to a military medical facility and are under observation at this time," it added in a statement.

The incident, which the military said was unconnected to any attack, was under investigation.