(Updates with U.S. statement)

BAGHDAD, July 10 (Reuters) - A major mortar and rocket attack on Baghdad's heavily fortified Green Zone compound on Tuesday killed at least three people including a U.S. military service member, the U.S. embassy said.

The embassy said in a statement that around 18 other people were wounded in the attack, including five U.S. citizens.

Iraqi police said earlier some 30 mortars and rockets were fired at the compound, which houses the Iraqi government along with the U.S. and British embassies. It was one of the biggest barrages against the zone since the U.S.-led invasion in 2003.

Police also said three people had been killed in the strike, but identified them as two Iraqis and a Filipino, implying the death toll might rise.

Reuters reporters saw smoke rising in the vicinity of the U.S. embassy just after the barrage.

Police said many of the wounded were Iraqis. Contractors of numerous nationalities work inside the compound, which covers a large area of central Baghdad and is bounded on one side by the Tigris river.

Mortar and rocket attacks on the Green Zone are common but militants have stepped up their strikes in the past few months.

The United Nations, in a recent report in which it complained about the mounting risks of operating in the compound, said attacks were almost daily and 26 people had been killed by indirect fire between mid February and late May.

U.S. military commanders say many of the rockets and mortars recovered after the attacks had been made in neighbouring Iran.

They say many often appear to have been fired from Sadr City, a Baghdad stronghold of the Mehdi Army militia of anti-American Shi'ite cleric Moqtada al-Sadr.

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