Shia Prime Minister Nuri al-Maliki blamed the car bombs on followers of Saddam Hussein, whose botched execution last month angered many among his fellow minority Sunni Arabs.

The US military said Iraqi and US troops were taking a "balanced approach" in attacking Shia and Sunni Arab militant groups -- apparently responding to charges by the once dominant Sunnis that Maliki's government has failed to crack down on Shia militias loyal to some of his political allies.

Some 600 members of radical young Shia cleric Moqtada al -Sadr's Mehdi Army are in custody, the military said.

Cracking down on Shia militias, US commanders say, is new and is key to a planned new security operation in Baghdad, backed by close to 20,000 American reinforcements. President George W. Bush is expected to defend sending more troops in his annual State of the Union address to Congress later on Tuesday.

A US military statement said that in the past 45 days, 52 raids had targeted the Mehdi Army, and 42 were focused on Sunni Arab insurgents. It did not say when the 600 Mehdi Army members who are awaiting prosecution were detained.

Monday's blasts killed at least 88 and wounded 160 at a second-hand goods market in Bab al-Sharji, a busy commercial area that is home to both Sunni Arab and Shia shopowners and traders in central Baghdad.

UN envoy Ashraf Qazi condemned the attacks and called on politicians and religious leaders to stop the violence and "save the country from sliding further into the abyss of sectarianism."

"These deplorable outrages again underscore the urgent need for all Iraqis to reject violence and together choose the path of peace and reconciliation," Qazi said in a statement.

Maliki has vowed to tackle all illegal groups, regardless of sect, in the new crackdown in Baghdad, which senior Shia allies say may be the last chance to avert a collapse of the new state brought about by the US invasion of 2003.

Meanwhile, President George W Bush prepared to defend his unpopular Iraq strategy in the annual State of the Union address on Tuesday, with support for the US leader at an all-time low.

The president is scheduled to speak at 9:00 pm Tuesday (0200 GMT Wednesday) at a time when US forces in Iraq face some of the worst violence since the March 2003 invasion.