A powerful car bomb killed four Iraqis and wounded about 25 in downtown Baghdad Monday, while two U.S. soldiers were killed in clashes with insurgent Shiite militiamen that persisted despite a ragged truce around the sacred city of Najaf.

The suicide bombing here and the continued flare-ups of fighting 80 miles to the south added to the growing sense of insecurity that has settled over the 13-month-old occupation of Iraq as U.S. officials move toward a June 30 deadline for transferring limited power to an interim Iraqi government.

The bombing, in Baghdad's well-to-do Al Harthiya neighborhood, blasted a 10-foot-wide crater in the street and shattered the windows of nearby shops and homes. It occurred about a mile from the U.S. checkpoint where Izzedin Salim, then occupying the rotating presidency of the Governing Council, was killed May 17 in a similar suicide bombing as his motorcade waited to enter the U.S. occupation headquarters.

Kareema Habib, 39, was injured in the head, shoulder and feet when she was thrown to the ground by the blast as she walked down the street with her niece to visit a brother who lives nearby. "I don't know what hit me," she said from her bed at Yarmouk General Hospital. "Suddenly I was on the ground, bleeding, and my niece was all over me."

Mowaffak Rubaie, the council's national security adviser, told al-Arabiya television that he believed he was the intended target. An unidentified caller had threatened Rubaie earlier Monday, the Dubai-based network said, and warned that all council members would be targets of such bombings if they did not stop cooperating with U.S. occupation authorities.

But Army Brig. Gen. Mark Kimmitt, the chief U.S. military spokesman here, said that Rubaie was nowhere near the blast and that there was no reason to believe he was the target. The blast killed four people in addition to the driver, Iraqi police said.

An underground insurgency seeking to drive U.S. occupation forces from Iraq has mounted an increasingly intense campaign of bombings and ambushes in recent months. Although aimed primarily at U.S. soldiers and other foreigners, the attacks have also targeted Iraqis who work for foreigners or are part of the Governing Council.

One Iraqi policeman was killed and another wounded in an attack Monday near Baghdad, and a soldier with occupation forces was killed by a homemade roadside explosive on the edge of the city, Kimmitt reported. An Iraqi security guard was killed Sunday during an assault on unidentified foreigners passing in a convoy of several vehicles, he said.

Kimmitt said clashes erupted twice Sunday night in Kufa, which adjoins Najaf, between patrolling U.S. soldiers and militiamen loyal to Moqtada Sadr, a Shiite Muslim cleric whose Mahdi Army has been challenging U.S. authority in the heavily Shiite region for the last month. Another confrontation erupted Monday evening when Mahdi Army fighters attacked a U.S. convoy on the edge of Kufa, according to Qais Khazali, a Sadr spokesman in Najaf.

Kimmitt said two U.S. soldiers were killed in the earlier clashes. Two Mahdi Army fighters were killed in the later exchange of fire, Khazali said.

Kimmitt declined to describe the continued fighting as a breakdown of the truce reached Thursday after mediation by Shiite Muslim members of the Governing Council and other Shiite leaders. One council member who participated in that mediation, Ahmed Chalabi, told reporters in Najaf on Monday that he is trying now to extend the agreement and work out ways it can be carried out more thoroughly.

Chalabi said that he came away from a Sunday night meeting with Sadr aides with a proposal for improving implementation of the cease-fire that he would put to U.S. authorities. It was unclear how welcome Chalabi's efforts would be, however, since U.S. officials have distanced themselves from him in recent weeks.

The governor of Najaf, Adnan Zurufi, said Monday evening that there was "an agreement from all sides" within the city and that they were now awaiting a response from the U.S. military.

Under the terms of Thursday's agreement, U.S. forces were supposed to begin joint patrols with Iraqi police in Najaf and surrounding areas in an effort to ease the impact of their presence. In return, Sadr's militiamen were supposed to leave the streets. Since then, Sadr's forces have largely disappeared from Najaf's streets but continue to challenge U.S. troops in Kufa.

The joint patrols have yet to be deployed. About 100 Iraqi security police who were taken to Najaf for that purpose returned immediately to Baghdad, saying their accommodations were inadequate. Kimmitt said in the capital that their return was not desertion, as some reports portrayed it, but the result of inadequate preparation for their billeting.

"We expect that over the next days, as things get worked out, they'll get down there," he said at a briefing.

In the northern city of Irbil, a cart carrying TNT exploded near the main gate of the offices of the Patriotic Union of Kurdistan, a Kurdish political party, injuring at least one child, a party official told the Associated Press. The official said the explosion occurred when a U.S. military contingent was a few blocks away visiting a local university.

Special correspondents Khalid Saffar in Baghdad and Saad Sarhan in Najaf contributed to this report.

Troops guard the wreckage of a vehicle that blew up in a suicide attack in downtown Baghdad.