US forces came under small arms fire during an operation targeting a weapons dealer linked to a foreign "terrorist network," the military said.

"During the engagement, armed terrorists gathered on the roof of one buildings and brought several women and children to their fighting positions as human shields," the military said.

The gunmen eventually released the women and children and allowed US-led forces to move them off the battlefield, but continued to rain down small arms fire from the rooftop, prompting the ground forces to call in an air strike.

Around 10,000 US and Iraqi forces have been pressing a massive air and ground assault in Diyala since last month in a bid to flush out al-Qaeda linked militants.

The military claims to have killed and captured dozens of militants, but senior commanders have said most of the senior al-Qaeda leaders in the area fled ahead of the assault.

In several raids in the northern and central regions of Iraq, the military detained another 18 suspected militants linked to bomb-making cells, it said in a separate statement.

Meanwhile, at least 14 people were killed in separate attacks in Iraq on Saturday.

In an early morning raid, gunmen stormed into a house south of Baghdad and opened fire on its residents, killing eight people and wounding another three, police said.

"Insurgents raided the house of the families of two brothers, killing eight people and injuring three people," Police Lieutenant Hamza al-Yaqubi said.

The killings took place in Al-Hamyariyah village, near Hilla, 70km south of Baghdad a mainly Shia farming region. It was not immediately clear what motivated the attack.