An unnamed US official is reported to have said that more than 600 insurgents have been killed in the battle for the Iraqi city of Fallujah.

The US military said 18 US and five Iraqi troops had been killed in the battle so far with another 178 Americans and 34 Iraqis wounded

Meanwhile, two US Cobra helicopters were brought down near the city, where US-led forces are battling insurgents.

A huge explosion erupted in the city, sending a large fireball into the sky.

The blast took place in the northwest part of the city, a stronghold for guerrillas, where US and Iraqi forces have been battling to gain control.   

Earlier, a US marine officer said US troops found three Iraqi hostages in the basement of a house in Fallujah. The hostages were found handcuffed and starving.

Car blast in Baghdad

Elsewhere in Iraq, at least 17 people were killed and 20 injured in a car bomb attack in central Baghdad.

Witnesses said the explosion in the Iraqi capital destroyed cars and a nearby building. Several policemen were among the wounded.

The bombing took place in a commercial district which was packed with shoppers at the time of the attack. The US military had no information on the blast.

Seven people were killed in a car bombing near the Culture Ministry in Baghdad yesterday.

And US forces say they have used artillery and air strikes in the northern city of Mosul after rebels attacked a number of police stations.