Gunmen killed 12 people and kidnapped dozens more when they ambushed three minibuses south of Baghdad on Saturday, as US President George W. Bush signalled a change in his Iraq policy.
A security source said the brutal attack took place when the buses passed through Latifiyah in the so-called Sunni "triangle of death" south of the capital.
"Gunmen set up a fake checkpoint on the highway heading to the city of Diwaniyah and ambushed these buses near Latifiyah," he told AFP. Diwaniyah is a largely Shiite city.
The massacre came as 21 others were killed in various attacks across the country, including 16 in Baghdad itself by a series of bombs.
Police also recovered 25 bullet-riddled corpses in the capital on Saturday.
Bush, in his weekly radio address, suggested a change in US strategy on Iraq after the massive losses by Republicans in the congressional mid-term elections.
Even as he reaffirmed his commitment to fight terrorism and said that Iraq remained "the central front in this war on terror", Bush made it clear that he was open to ideas from the Democrats as well as from a group of independent experts working on new proposals for Iraq, with whom he is to meet on Monday.
Bush also praised outgoing Defence Secretary Donald Rumsfeld, who resigned the day after elections widely seen as a referendum on the Iraq war, while describing his expected replacement, former CIA chief Robert Gates, as someone who "has shown that he is an agent of change.
"As secretary of defence, he will provide a fresh outlook on our strategy in Iraq and what we need to do to prevail," Bush added.
On Friday, General Peter Pace, chairman of the Joint Chiefs of Staff, said US military leaders are making their own reassessment of the course in Iraq, signalling major changes ahead with Rumsfeld's departure.
Key questions facing any new regime at the Pentagon will be whether to send more US troops into the country to smother sectarian violence, and whether to move more aggressively against the Shiite militias at the source of much of the bloodshed.
"We need to give ourselves a good, honest scrub about what is working, what is not working, what are the impediments to progress and what should we change about the way we're doing it, to ensure that we get to the objective that we have set for ourselves," Pace said in an interview with CBS television.
Bush acknowledged that the situation in Iraq had contributed significantly to the defeat suffered by Republicans in the November 7 elections, when they lost control of both houses of Congress, effective from January, to opposition Democrats.
"The elections will bring changes to Washington," the president said. "But one thing has not changed: America faces brutal enemies who have attacked us before and want to attack us again.
"I have a message for these enemies: do not confuse the workings of American democracy with a lack of American will. Our nation is committed to bringing you to justice, and we will prevail."
Iraqi officials said they were keenly observing the changes in Washington.
"We are keeping a close track on Washington, as whatever change occurs there is bound to impact us," said Bassam Ridha, advisor to Prime Minister Nuri al-Maliki. "We just hope that it is beneficial to Iraq."
Meanwhile, the latest attacks in Iraq where more than 100 people have been killed in the past four days came amid fresh threats from Al-Qaeda in Iraq chief Abu Hamza al-Muhajer -- including one to blow up the White House.
In an Internet audio message that could not be independently confirmed, Muhajer said on Friday he had mobilised 12,000 fighters to create an Islamic state in Iraq.
An alliance of Sunni insurgents headed by al Qaeda in Iraq announced the creation of an independent Islamic emirate in an Internet video on October 15.
Muhajer also said US forces occupying Iraq were preparing to cut and run.
"The enemy is now teetering under the blows of the mujahedeen... and preparing to pack up and flee," he said.
On Thursday, Rumsfeld himself acknowledged that Muslim extremists were posing stiff challenges to the US military in Iraq.
Muhajer also threatened to blow up the White House.
"We announce today the end of a phase of the jihad (holy war) and the start of a new one... to usher in the project of an Islamic caliphate and restore Islam's glory," he said in the recording.
"We swear we will not rest from our jihad... before blowing up the filthiest house, dubbed the White House."