In one of the worst incidents, gunmen dragged 24 civilians out of their cars at a makeshift checkpoint in a town north of Baghdad and shot them "execution style," police said.

The victims included students, children and elderly men, said a senior police official in Diyala province, scene of frequent attacks by insurgents waging a campaign of bombings and shootings to topple the US-backed, Shia-led government.

In Iraq's south, a Sunni religious group accused security forces in the Shia-run city of Basra of killing 12 unarmed worshippers in a mosque early on Sunday, but police said they had returned fire and shot dead nine "terrorists."

The incident came just hours after a car bomb killed 28 people in Basra, challenging a state of emergency declared by new Prime Minister Nuri al-Maliki to crack down on criminal gangs and Shia factions whose feuding threatens oil exports.

In other violence Sunday, four employees of a telephone exchange in Baghdad's Sadr city neighbourhood were shot dead as they arrived for work, said the interior ministry.

Two bystanders were also injured in the attack, which was carried out by unknown gunmen in the morning.

It was among the worst violence Iraq's second city has seen since US-forced invaded to topple Saddam Hussein in 2003.

The southern region patrolled by British forces had been relatively calm compared to Sunni Arab guerrilla strongholds further north where American forces are based.

But security in Basra has deteriorated sharply over the last year as Shia groups tussle for power in the key oil hub, source of most of the country's export revenue.

Communal violence has mounted throughout Iraq since the February bombing of a Shia shrine in the city of Samarra, touching off a wave of revenge killings that sparked fears of civil war.

The United States, which has 130,000 troops in Iraq, hopes Maliki's broad coalition of majority Shias and minority Sunnis and Kurds will be able to defuse relentless violence.

Key to that will be the naming of non-sectarian interior and defence ministers who can quell communal and insurgent attacks.

Intense wrangling forced Maliki to leave the posts empty when he unveiled his government of national unity on May 20.

He has threatened to present his own nominees to parliament if political blocs could not agree on candidates.

Government sources had said leaders were close to a deal to present to parliament on Sunday former Shia army officer Farouk al-Araji for interior minister and Sunni General Abdel Qader Jassim, commander of Iraqi ground forces, for defence.

But deputy speaker Khaled al-Attiya said on Sunday the parliament session was postponed "until further notice."

Political sources said the powerful Shia Alliance was deadlocked on a nominee for the Interior Ministry post.

They said the Supreme Council for Islamic Revolution in Iraq threatened to reject Araji for the interior portfolio, a move, which could split the bloc, to which Maliki belongs.

Some members of the Shia Alliance said a deal could still be struck later on Sunday. But even so, there are no guarantees any candidates will be able to stabilize the country.

Iraqi state television, meanwhile, quoted Interior Ministry officials as saying four Russian embassy employees kidnapped in Baghdad have been released. The embassy said it could not confirm this.

A Russian embassy employee in Baghdad was killed on Saturday and four other embassy staff were kidnapped when gunmen blocked their vehicle in the well-to-do Mansour district, the latest of many attacks against foreigners in the chaotic capital.

Aside from a security crisis, Maliki is also under pressure to assure Iraqis his government will deliver justice after a military probe cleared US soldiers of any wrongdoing in the killing of civilians in the town of Ishaqi in March.

The alleged massacre of as many as 24 civilians in the town of Haditha last year by US troops has also infuriated Iraqis.