Bombs exploded within moments of each other at a handicraft market and a popular cafe inside Baghdad's fortified Green Zone on Thursday, killing at least five people, including three American civilians. It was the first time insurgents had penetrated the heavily protected area that is the seat of the Iraqi government and home to American officials.

The explosions occurred around 12:40 p.m. and appeared to be caused by suicide bombers, witnesses and a senior Iraqi official said. A waiter at the Green Zone Restaurant and Coffee Shop said he saw two Arab men with black bags enter the cafe, order tea, then sit for 25 minutes while one of the men talked continuously to the other, appearing to reassure him.

The explosion at the bazaar occurred five minutes after the man who was talking got up and left, said the waiter, Abdul Razak Mohammed. The man's companion, still seated, then detonated a bomb, shredding the canvas-enclosed restaurant, which Mohammed said contained 17 or 18 lunch patrons and four workers.

The Americans killed included at least three employees of Dyncorp Inc., a security firm with a large presence in the Washington area, a spokesman said. A fourth Dyncorp employee was missing and two were wounded. At least 20 people were wounded in all, including a U.S. soldier, a U.S. airman and two American civilians, the military said.

DynCorp identified its employees killed in the attack as John Pinsonneault, 39, of North Branch, Minn.; Steve Osborne, 40, of Kennesaw, Ga.; and Eric Miner, 44, of South Windham, Conn., according to the Associated Press. Ferdinand Ibaboa, 36, of Mesa, Ariz., was said to be missing and presumed dead. The two wounded employees were identified as John Jenkins, 39, of Meridian, Ga., and Michael Cannon, 34, of Holly Springs, N.C.

Within hours of the bombings, U.S. warplanes, attack helicopters, field artillery and tanks launched strikes against targets in Fallujah, the U.S. military said. The city is believed to be the base of operations for Abu Musab Zarqawi, the Jordanian militant whose organization, Monotheism and Jihad, asserted responsibility for the Green Zone attacks.

The U.S.-led assault, which the military said also involved Iraqi forces, was of a magnitude well beyond what U.S. officials call the "precision airstrikes" that had become routine in recent weeks. Terrified residents said the sustained attacks began around 10:30 p.m. and grew deafening inside the city near midnight, as buildings in four neighborhoods were targeted.

The Associated Press, citing officials at Fallujah General Hospital, reported at least five people killed and 16 wounded.

"The operations were designed to target the large terrorist element operating in the area of Fallujah," the U.S. military said in a statement. "Operations in Fallujah will continue so long as terrorists remain in the city."

The statement underscored a demand by Iraq's interim government that Fallujah residents hand over Zarqawi or be "smashed," as a senior Iraqi minister put it at a news conference Thursday. Peace talks with a delegation from the city broke off Thursday, with one Fallujah negotiator calling the government's demand "impossible."

The U.S. military is braced for a rise in violence as Iraq prepares for elections scheduled for January. The coordinated bombings inside the Green Zone, which is organized as a safe and comfortable slice of Americana in central Baghdad, was evidence of the insurgents' growing reach.

The U.S. military said it intended to increase security around the Green Zone and bases in and around Baghdad. The new measures will include increased armed patrols around the capital as well as combat air patrols, the military said, and were decided upon after intelligence showed that insurgents were planning to launch new strikes.

In separate attacks Thursday, two U.S. soldiers were killed in Baghdad, one by a roadside bomb in the morning and another when a convoy was ambushed by small-arms fire around 1:45 p.m., the U.S. military said. The combined attacks raised the American death toll in Iraq to 1,086.

"We have intelligence to be prepared for and to expect an increase in activity for attacks on the International Zone," said Lt. Col. Steve Boylan, a U.S. military spokesman, using the official name of the Green Zone, adopted when political power was transferred to an interim Iraqi government on June 28.

Mohammed Obeidi, whose right hand was struck by a piece of flying glass in the cafe explosion, said the timing of the bombings was linked to the start of the Islamic holy month of Ramadan, when resistance to the American presence in Iraq has increased. "It's definitely because it's the start of Ramadan," Obeidi said, adding, "This is not what the Koran says."

Monotheism and Jihad used an Islamic Web site to assert responsibility for Thursday's Green Zone bombings. The statement said "two lions" from the group's "Martyrdom Brigade" had managed to penetrate the Green Zone.

First Sgt. Steven Valley, a U.S. military spokesman, said outside the mangled cafe that the bombs had been brought in by hand. "Were they suicide attacks?" he said. "We can't say definitively."

But Qasim Dawood, the Iraqi state minister, said "initial information" indicated that the attacks were suicide bombings. Although insurgents lob mortar shells inside the Green Zone with growing frequency, the bombs were the first to explode inside the compound's four-square-mile perimeter. The zone contains the U.S. and British embassies and effectively serves as the heart of the interim Iraqi government.

The Green Zone is encircled by 12-foot blast walls, five-foot sandbags, coiled razor wire, tanks, machine gun towers and checkpoints manned by U.S. and Iraqi troops. Entry of people and vehicles is restricted and visitors must display identification and pass through multiple body searches and X-ray machines.

But security can be uneven, with some checkpoints limiting access only to people with pre-arranged escorts and others allowing access to anyone carrying a U.S. passport.

Until recently, the Green Zone was an oasis that included Saddam Hussein's ornate palaces, lush green lawns, Chinese restaurants and Internet cafes. Western officials jogged along its wide boulevards and even hailed taxis -- unthinkable acts in the rest of Iraq, which, by contrast, was termed the Red Zone by U.S. officials.

Obeidi, a 25-year-old Iraqi who owns another Green Zone eatery, Mo's Restaurant, said security in the zone had deteriorated as the U.S. military shifted authority to Iraqi security forces in recent weeks.

"Before, it was really safe," Obeidi said. "They passed it over to the Iraqis, the ING [Iraqi National Guard], the Iraqi police. When they see someone they know, it's just 'Go on in.' They don't understand it's for our safety."

Last week, the U.S. military removed what it said was an unexploded bomb outside the Green Zone cafe. U.S. officials issued a warning advising residents to avoid the popular restaurant and the handicraft market, which featured about 20 stalls with Iraqis selling virtually everything from Persian rugs to DVDs.

Valley, the military spokesman, said business at the cafe had dropped dramatically because of the warning.

On Thursday afternoon, the cafe, a large canvas tent built on the site of a former gas station, was a pile of twisted metal. A two-foot crater could be seen inside the restaurant. All that stood was the tent's frame. Around it lay shattered glass, pieces of plastic chairs, small pools of blood and bits of food and flesh that had been blown about 50 feet away into the street.

Uniformed military investigators and dazed and injured workers milled around the scene. One man sat against a nearby wall, his head wrapped in a white bandage. Another had a bandaged chest.

Mohammed, the waiter in the Green Zone Restaurant, said two Arab men, both about 25, entered the restaurant together. One wore a gray shirt, the other a yellow shirt and jeans. Both men carried black bags slung over their shoulders. One got up and walked across the restaurant to the cashier and ordered tea. Mohammed said none of the workers recognized the men.

The cashier asked the man if they were Iraqi. "No, we're Jordanian," the man replied, according to Mohammed.

Mohammed said the man in the gray shirt kept one hand inside his bag and the other on the table while the other man spoke to him. The man in the yellow shirt "kept talking and talking and talking," Mohammed said, speaking through an interpreter. "We think he was brainwashing him, telling him what to do."

After about 25 minutes, the man in the yellow shirt threw his bag over his shoulder and left. Mohammed said he was told by another worker that the man got into a taxi.

Five minutes later, he said, he heard the first explosion at the handicraft market, more than a quarter-mile away.

Seconds later, the man in the gray shirt detonated the bomb, he said.

Obeidi said he had been visiting his cousin, who owns the restaurant. He said he had walked outside, sat on his black Camaro and called his fiancee. After he finished, he said, he walked back inside and went to the cashier to order tea. Then, he said, the bomb went off.

"People were screaming; I was on the floor," he recalled. "People were stampeding, trying to get out."

Mohammed said the attacks violated the principles of Islam. "In Islam we don't have this," he said. "Especially on Ramadan. We don't kill anyone."

Correspondent Karl Vick contributed to this report.

An American helicopter passes over the heavily protected Green Zone in Baghdad after two explosions at a popular cafe and a handicraft market. The area is home to American officials, the U.S. Embassy and offices of the interim Iraqi government. U.S. soldiers rush to the scene of a blast in the Green Zone, where an apparent suicide attack killed several Americans.