Bombers slaughtered 18 Iraqi children playing football on Tuesday as a relentless bombing spree snuffed out dozens more lives and a US spy chief acknowledged that the crisis amounts to "civil war".

The children, aged between 10 and 15, died when a car parked next to a football pitch in the western Iraqi city of Ramadi exploded while they were playing, an Iraqi defence official told AFP.

Around 20 more children were wounded in the latest attack in the restive western city, a hotbed of the anti-US insurgency which is fast also becoming a battlefront between rival Sunni factions, the official said.

In another bloody bomb attack, a suicide bomber rammed a truck into the Sheikh Fathi police station in the main northern city of Mosul and detonated explosives, killing at least six policemen, police said.

A spate of bomb and mortar attacks in and around Baghdad killed 16 more people, including two civilians who died when a hidden bomb ripped through a budget restaurant frequented by Shiite labourers.

The US military also suffered losses, with three soldiers killed Tuesday by a roadside bomb as they carried out a mission outside Baghdad.

In Washington, Director of National Intelligence Michael McConnell told senators that the crisis was "moving in a negative direction" and that "the term 'civil war' accurately describes key elements of the Iraqi conflict."

"Unless efforts to reverse these conditions gain real traction during the 12-18 month time frame ... we assess that the security situation will continue to deteriorate at rates comparable to the latter half of 2006," he said.

Meanwhile, police were investigating how a bomb was detonated inside the public works ministry on Monday, killing five officials and lightly wounding Vice President Adel Abdel Mahdi.

"Thirty-five employees of the public works ministry are now under interrogation by the interior ministry about how the bomb was brought into the building," an official told AFP, on condition of anonymity.

"Most of them are bodyguards and ministry security men," he said, adding that those wounded in the explosion will be questioned once they recover.

The attack came as the US-led security plan struggled to halt the vicious sectarian carnage between Sunni and Shiite armed groups in Baghdad, which has seen a surge in bomb and mortar attacks since Saturday.

State television described Monday's bombing as an assassination attempt while the security official said it appeared that high explosive was used.

"Employees were told a day before that the vice president was going to attend the ceremony. So the person who planted the bomb was already aware that he was going to be present," the security official said.

"They started preventing visitors from entering the ministry a day earlier, so the criminal must be from inside. Early investigations indicate that an employee ... smuggled TNT into the building," he said.

Shortly after Monday's blast, an AFP photographer saw a young man being led from the building and handcuffed by Iraqi troops.

More arrests followed on Tuesday in a separate part of the security plan when Iraqi army special forces and US advisers swooped on suspected Shiite militia hideouts in the east Baghdad suburb of Sadr City.

The force seized 16 members of radical cleric Moqtada al-Sadr's Mahdi Army militia in a part of town that was once a no-go area for security forces.

The US military accused the suspects of "sectarian murder, torture and kidnapping."

The beleaguered Iraqi government was buoyed Tuesday by news that the cabinet had given its long-awaited nod to a draft oil law.

The law, which will now be submitted to parliament for approval, aims to distribute revenues from crude oil exports equitably across all 18 provinces and open the sector to foreign investors.

A key plank in moves to reunite the divided country, it has been a subject of fierce debate among leaders of Iraq's bitterly divided communities.

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