The bloodiest attack in Iraq was a twin car bombing at the site of a ribbon-cutting ceremony for a new water pumping station in the poor Al-Amel neighbourhood of southwest Baghdad.

A crowd of curious children had gathered to watch the ceremony when the bombs went off, sending clouds of black smoke billowing into the air.

A bloodied witness said he helped carry out 32 bodies of children from the rubble.

There were scenes of hysteria and chaos at Baghdad's Yarmuk hospital where doctors said they received 41 bodies from the bombings.

"This is my son Ahmed, This is my son Ahmed," howled one man.

Iraq's Health Minister Alaadin Sahab Adwan later put the toll from the attacks at 42, with only five of them adults.

The US military said 10 US soldiers were also wounded in the attack and that a third car bomb went off in the area at the same time near an Iraqi national guard checkpoint.

The attacks followed another car bombing west of the capital that killed one US soldier and two Iraqis and wounded 13 including three soldiers, according to the military.

Bloodshed also spread to northern Iraq with four killed and 16 wounded in a car bombing in Tall Afar, where US and Iraqi forces battled insurgents in early September.

In other violence, a soldier with US-led forces whose nationality was not immediately known was killed in a rocket attack near Baghdad.