At least 18 Iraqi policemen and security guards were killed and 13 were wounded yesterday when rebels stormed a police station northeast of Baghdad, security officials said.
Thirty detainees suspected of terrorist activities were freed in the raid in the town of Muqdadiya, a security official said.
Casualties included a police commando who was killed and another who was wounded when their vehicle hit a roadside bomb on the outskirts of town as they rushed to reinforce the local force.
The US military also reported that some US troops were ambushed while en route to the site, without mentioning any casualties.
The rebels lost at least three men, security officials said.
The dawn raid, which lasted over an hour, involved a large number of insurgents who attempted to free some of the 250 detainees held at a government compound in the centre of town consisting of a police station, a courthouse and the municipal council.
Firing machine guns and rocket-propelled grenades the rebel force broke in to the police station, fighting local forces until army reinforcements arrived in the town 100km northeast of Baghdad.
US helicopters pursued rebels and attacked them as they escaped into orchards on the outskirts of the town, Iraqi security officials said. US officials acknowledged that reconnaissance craft circled the area.
"Aerial reconnaissance teams confirmed the building was damaged and vehicles outside were burnt after being targeted with several rocket propelled grenades and small arms fire," Sergeant Doug Anderson said.
Police later surrounded the town as local inhabitants locked themselves in their homes and the army swept the area looking for the rebels.
The brazen raid came just a day after Iraq marked the third anniversary of the US-led invasion to topple former Iraqi president Saddam Hussein in March 2003.
There have been a number of similar raids in the past, including one in December when some 20 rebels attacked the main hospital in Kirkuk, to free a detained member of a cell who had planned to assassinate a leading judge investigating Saddam.
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