Al Qaeda's wing in Iraq, led by Jordanian militant Abu Musab al-Zarqawi, said it carried out the Baghdad attack that wounded at least 20 others -- part of its relentless campaign to bring down the government and drive out US troops.

The killings of the 41, some found in Qaim near the Syrian border and other south of Baghdad in what has become known as the "triangle of death," bore the marks of the insurgency -- some were shot in the back of the head, others beheaded.

Mainly Sunni insurgents have kept up a campaign of suicide attacks, car bombings and execution-style killings, denting Iraqi and US officials' hopes that Iraq's landmark Jan. 30 elections would help stabilize the country.

Their ranks have been boosted by frustration at the US occupation, a growing number of shootings of Iraqi civilians and by abuse of prisoners in US-manned jails.

"Our brother Karim ibn al-Karim bin al-Karim, along with a group of mujahideen, targeted ... what should be called the hotel of the Jews because it is their safe haven and stronghold," Al Qaeda Organization for Holy War in Iraq said in a statement posted on an Islamist Web site.

"The mujahideen opened fire on the police and guards protecting the Jews and when the entrance was clear, the hero ... blew up the infidels," the group said, adding that the attack was timed to avoid harming any Muslim passers-by.

Huge plumes of thick smoke blackened the Baghdad sky as police, ambulances and fire engines rushed to the scene, their sirens piercing the early morning calm.

Hospital officials said two policemen were killed and dozens of others taken to hospital for treatment.

In Qaim, near the Syrian border and 500 km west of Baghdad, the bodies of 26 people, including one woman, were found, police said. A hospital doctor said the victims, in civilian clothes, had been shot two days ago.

Each of the bodies was riddled with bullets and found wearing civilian clothes, they said.

Fifteen other bodies -- some shot, others beheaded -- were found just south of Baghdad in the Sunni-dominated area now known as the "triangle of death," Iraqi army sources said.

The decapitated corpses were found inside an abandoned base of the former Iraqi army, Defense Ministry Capt. Sabah Yassin said. The bodies included 10 men, three women and two children.

Yassin said the bodies had no identification on them. But some of the dead men were thought to have been part of a group of Iraqi soldiers who were kidnapped by insurgents in the area two weeks ago, Yassin said.

In the southern city of Basra, a roadside bomb in the southern city of Basra killed one policeman, police said.

Insurgents have vowed to push their campaign until US forces have left, trying to capitalize on the anger of many Iraqis who have become frustrated at what they say is daily harassment by US soldiers.

Controversy over US tactics in Iraq has been stoked by the fatal shooting of an Italian secret agent during a hostage rescue, and the accidental killing of a Bulgarian soldier.

An American general said Tuesday the US military was investigating procedures at the often tense military checkpoints as part of a probe into the intelligence officer's killing.

Italy's Foreign Minister Gianfranco Fini earlier rejected a US account of how its forces killed the agent last Friday after he rescued a journalist held hostage in Iraq.

Agent Nicola Calipari died shielding reporter Giuliana Sgrena from US gunfire as they drove to Baghdad airport.

The US military has said its soldiers fired after the Italians' car approached a checkpoint at speed and failed to heed signals to slow down. But Fini said the team had been driving slowly and received no warning.

Bulgaria, a US ally which has 430 troops in Iraq, has also accused US troops of accidentally killing a Bulgarian soldier and demanded a full investigation.