Iraq's southern shrine cities of Najaf, Karbala and Kufa have often been targeted by Sunni insurgents waging a sectarian war against the country's majority population.

"The final toll of the attack in Kufa is 16 killed and 70 wounded," Bassim Naema, spokesman for the provincial health department, told AFP.

Mayor Abu Dhar Yussef said a car packed with explosives appeared to have targeted a two-storey restaurant popular with pilgrims who flock to the shrines in this Shia town 140 kilometres (87 miles) south of Baghdad.

"Why did it take security forces more than half an hour to get to the area?" demanded the enraged mayor amid a scene of devastation in the marketplace.

"Why did they not send us more support than just some ambulances and firemen?"

Angry crowds filled the main square and brandished bloodied body parts to news cameras while chanting anti-American slogans and condemning terrorism.

Kufa is a stronghold of supporters of radical cleric Moqtada al-Sadr, and each time government security forces fail to prevent an attack it triggers calls for his Mahdi Army militia to return to the streets.

"We blame the Iraqi government and the American army for this incident," shouted Hussein Kadhim.

"How could a driver leave his car in this area? How could he have passed through several checkpoints and then park it in a forbidden zone?" asked Ahmed Mohammed amid the chanting crowds.

"The Iraqi government should admit that it can't protect the people," he added in disgust.

Every bloody blast in these overwhelmingly Shia cities has become fodder for the government's critics in Sadr's movement.

"The government is responsible for the security, economy and welfare of the people -- what has it really achieved in those respects?" asked parliamentarian Nasser al-Rubayi, a member of Sadr's opposition parliamentary bloc.

"We expect from now on there will be a mass explosion whenever we have security violations," he added. "There could be a popular revolt, and the government should tell the people if it can carry out its duties or not."

Pilgrims from all over the Shia Islamic world, especially Iran, flock to the shrine cities of Najaf and Karbala, where some of Shiism's most revered leaders are buried.

Kufa also receives its share of pilgrimage traffic, and in July 12 people -- mostly Iranian pilgrims -- were killed in a bomb attack, while another 50 Iraqis died in a December car bombing.

Under the influence of al-Qaeda's extremist Sunni ideology, many insurgent groups target Shias as heretics, as well as because of their current dominance in the US-backed government.

Shias, sometimes with the complicity of security forces, have unleashed a campaign of revenge killings targeting Sunnis in mixed areas, leaving piles of corpses on the streets in the morning.

Last year the US military identified these sectarian gangs as the biggest threat to stability in the country, but in the wake of a new joint US-Iraqi security operation, their activity has declined dramatically.

al-Qaeda-led Sunni groups are now once more seen as the greatest threat.

Sectarian violence is particularly fierce in the more mixed regions around Baghdad, and farther north in Diyala province where Shias are regularly massacred by insurgents.

On Tuesday, a suicide attack on a police station in Jalawlah, an area inhabited predominantly by Kurdish Shias, killed two police and wounded 20 others, mostly civilians.

In Baghdad itself, a bomb exploded killing two people and wounding four others, medical sources said.

The violence comes as Iraq's national unity government, seen as key to bringing the country out of its current crisis, shows increasing signs of unravelling.

Over the past few days, top Sunni politicians have repeatedly threatened to pull out of the Shia dominated government because they are being excluded from the governing process.

Vice President Tariq al-Hashemi told CNN on Monday that if the situation was not addressed soon, his Islamic Party of Iraq, which together with its Sunni allies controls six cabinet seats, would withdraw from the government on May 15.