"A suicide truck bomb exploded near the Sadriya market, in central Baghdad on the east bank of the Tigris River. At least 127 people were killed and 305 wounded," the source said.

The blast sent a long plume of thick grey smoke into the air just before dusk, a time when markets are usually crowded with shoppers out for food ahead of the night-time curfew.

The head of bomb squad at Baghdad's interior ministry said the truck was packed with one tonne of explosives.

The bombing was the biggest attack this year and its casualty toll was second only to a series of Sadr City car bombings on November 23, which killed more than 200 people.

The Sadr City bombing was by far the largest attack in Iraq since the March 2003 US-led invasion of the country.

Yesterday's attack also came just two days after two suicide bombers killed 73 people and wounded 163 when they struck a market in the centre of Hilla, the predominantly Shiite capital of Babil province south of Baghdad.

Prior to yesterday, the worst blast this year was in Baghdad on January 22, when 88 people were killed and 160 wounded as two car bombs slammed the Haraj second-hand market in a coordinated attack.

Market bombings have become a regular targets as they increase the potential for casualties.

Iraqi and US authorities plan to flood Baghdad's streets with up to 80,000 troops to snuff out the insurgent-led bombings and vicious sectarian attacks that killed more than 34,400 people last year according to the United Nations, mostly in Baghdad.

Earlier, a US Army helicopter crashed Friday in a hail of gunfire north of Baghdad, police and witnesses said the fourth lost in Iraq in the last two weeks. The US command said two crew members were killed, and the top US general conceded that insurgent ground fire has become more effective.

An al-Qaeda-affiliated group claimed responsibility and said its fighters had "new ways" to attack American planes.

A brief US military statement gave no reason for the crash and did not identify the type of aircraft. A Pentagon official said it was an Apache attack helicopter, which carries two crew members.

The US military announced the deaths of six more troops in Iraq on Friday, including two killed by Sunni Arab insurgents in their stronghold of Al-Anbar province, west of the capital Baghdad.

A marine and a soldier died from wounds received due to "enemy action" during combat operations in Al-Anbar on Thursday, while another marine died from a heart attack in the province the same day, a statement said.

It corrected an earlier statement that had given the day of all three deaths as Friday.

Earlier, the US military announced the deaths of three soldiers in two separate traffic accidents on Thursday.

The official spoke on condition of anonymity because he was not authorised to release the information. Another Apache crashed Sunday during heavy fighting with a Shia cult near Najaf, also killing two soldiers.

Iraqi police and witnesses said the latest crash occurred about 7:30 am as two Apaches were flying along a well-established air route near Taji, a major US base about 18km north of Baghdad.

One helicopter was struck by heavy machine gunfire but continued flying, the witnesses said. The other helicopter banked sharply and flew back toward the source of fire, apparently to attack the target.

But that helicopter was also struck by ground fire, exploded in a ball of fire and crashed, the witnesses said. The other helicopter flew away, they said. The witnesses spoke on condition of anonymity, fearing for their own safety.

The United States has lost more than 50 helicopters in Iraq since May 2003, about half of them to hostile fire.

In fresh violence at least nine people were killed on Saturday in a series of attacks across Iraq, including six police commandos shot dead near the northern town of Samarra, security officials said.

A group of gunmen attacked a police checkpoint early in the day, killing six commandos and wounding another six, an official at a local police coordination centre told AFP.

The attack took place north of Samarra, which is 125km north of Baghdad, he said.

However, the loss of four helicopters since Jan. 20 has raised new questions about whether Iraqi insurgents are using more sophisticated weapons or whether US tactics need changing.

Three of the latest crashes involved Army helicopters two Apaches and one Black Hawk. The fourth was an OH-6A observation helicopter operated by the Blackwater USA security firm. All were believed shot down, and 20 Americans, including four civilian, died in the crashes.

In Washington, Gen. Peter Pace, chairman of the Joint Chiefs of Staff, acknowledged that insurgent ground fire in Iraq "has been more effective against our helicopters in the last couple of weeks."

But Pace said it was unclear whether "this is some kind of new tactics or techniques that we need to adjust to."

The Islamic State of Iraq, an al-Qaeda-linked group, claimed on Friday that it shot down the Apache near Taji in a statement posted on an extremist Web site.

"We tell the enemies of God that the airspace of the Islamic State in Iraq is prohibited to your aircraft just like its lands are," the statement said. "God has granted new ways for the soldiers of the State of Iraq to confront your aircraft."

Iraqi insurgents have used heavy machine guns, rocket-propelled grenades and shouldered-fired SA-7 anti-aircraft missiles throughout the Iraq conflict. US officials believe Iran is supplying Shia militias with new weapons including more powerful roadside bombs, Katysuha rockets and a newer class of rocket-propelled grenades.

Some of those weapons could have found their way into the hands of Sunni insurgents, who operate around Taji.