Meanwhile, US troops were ordered by Iraq's prime minister to free a detained Shia militant, in more evidence of the political wrangling undermining their mission to halt a wave of sectarian violence.
The US military said at least 10 soldiers were killed on Tuesday -- including four in a single roadside bomb attack on their vehicle -- as the toll for the first half of the month hit 67, or almost four per day.
US spokesmen say the casualty surge is partly to be blamed on a spike in violence during the holy month of Ramazan, but the grim news will pile further pressure on the White House.
In another setback for US plans, Prime Minister Nuri al-Maliki ordered the release of a leading member of radical cleric Moqtada al-Sadr's political organisation who had been detained by American troops.
Sadr's movement said Sheikh Mazen al-Saedi -- a party precinct captain in Baghdad who was detained on Monday -- had been driven to a Sadrist office by the ministry of the interior.
The US military issued a terse statement, saying simply: "Sheikh Saedi was released at the behest of the government of Iraq this morning. All further questions should be directed to the government of Iraq."
Privately, US officials expressed concern over Maliki's decision to release a man they believe is responsible for sectarian violence, but the prime minister defended his decision.
"We are now trying to find political solutions for all crises," Maliki told reporters in the central Iraq city of Najaf after meeting Grand Ayatollah Ali Al-Sistani.
"These solutions will definitely put an end to all arrests and tension. By God's will, things will go back to normal and no one will be arrested except those who have committed crimes against Iraq and the Iraqis."
Media reports suggest that a panel of experts set up by Bush will soon recommend he abandon plans to build a secure democracy in Iraq and instead look for an exit strategy.
The BBC said the head of the commission, former secretary of state James Baker, believes Iraq is in "one helluva mess", three-and-a-half years after a US-led invasion overthrew the regime of Saddam Hussein.
Maliki dismissed reports that Washington has issued a two-month deadline for his government to make progress in restoring order.
"The reports that US officials in the US administration have given an ultimatum to the Iraqi government were rejected by those officials. Some took it mistakenly as the end of a government," he said.
Maliki also met Sadr in Najaf and both called for an end to the violence.
"Iraq is undergoing very difficult circumstances," Sadr said at their joint news conference.
"I call for a rejection of sectarianism, kidnapping, sectarian killing and division. I call for the unity of Iraqi Sunnis and Shias, to act as one hand in building Iraq and ridding it of the daily bloodletting."
American commanders privately accuse Sadr's Mahdi Army of being one of the main forces behind Iraq's recent descent into sectarian bloodletting and the rise in fatal attacks on US troops.
Maliki, however, has warned it will be difficult to disarm a militia with such popular support and said this week he had vetoed a US plan to invade Sadr's stronghold in the impoverished eastern Baghdad suburb of Sadr City.
Before news of Saedi's release emerged, several hundred Sadr supporters gathered in eastern Baghdad to protest at his detention and calling for "the end of the occupation".
Activists chanted: "No, no to America! No, no to Israel!"
Meanwhile, violence and explosions continued around the country.
Three Iraqi soldiers killed and three more wounded in bomb attack on a patrol protecting fuel tankers near the northern oil hub of Kirkuk, according to local police Captain Iman Jassim Khudhir.
A roadside bomb killed Colonel Ali Qasim al-Timimi, director of intelligence in the police of the southern province of Meysan, and four bodyguards, a security source said.
In Suweira, south of the capital, three bound and blindfolded corpses washed up in the Tigris River and a guard escorting an electricity company repair team was shot dead, police said.

Copyright AFP (Agence France-Presse), 2006