US marines stationed in the city confirmed there had been an incident in Fallujah that had caused civilian casualties, according to Lieutenant Roger Hollenbeck, but could not immediately provide further details.

Iraqi state television reported that 25 people were killed, while US marines at a nearby base told an AFP photographer that initial reports from Iraqi forces at the scene put the toll at between 10 and 15 people.

Fallujah residents told AFP by telephone that the bomb attack hit mourners paying their respects to Ali Ahmed Zuwail, the nephew of tribal leader Abdel Razeq al-Issawi.

Zuweil was shot dead Wednesday.

al-Qaeda backed militants in Fallujah are locked in a deadly struggle with the local police force and tribal levies and have been waging a campaign of assassination and intimidation against government officials.

The chair of the city council was killed in early May.

Earlier two US soldiers were killed in fighting in Iraq's restive western province of al-Anbar, the US military said on Thursday.

The latest deaths, which happened on Wednesday, brought the number of soldiers killed in May alone to 88, while 3,436 US servicemen have died since the March 2003 US-led invasion, according to an AFP count based on Pentagon figures.

The US military confirmed on Thursday that a body found floating in the Euphrates was one of three American soldiers snatched by al-Qaeda 12 days earlier, as a bomb attack hit civilian mourners at a funeral in western Iraq.

Lieutenant Colonel Josslyn Aberle of US command in Baghdad said a body found on Wednesday had been identified as Private Joseph Anzack, and that the hunt for his missing comrades would continue unabated.