* Bomb at Sadr City council meeting kills 10

* 2 U.S. government employees, 2 U.S. soldiers among dead

* Two killed in car bomb attack in northern city of Mosul

By Dean Yates

BAGHDAD, June 24 (Reuters) - A bomb killed 10 people including two U.S. government employees and two U.S. soldiers at a council meeting in the Baghdad stronghold of Iraqi Shi'ite cleric Moqtada al-Sadr on Tuesday, officials said.

Police said six Iraqis were killed and 10 wounded in the attack at a local council building in southern Sadr City.

The U.S. military blamed renegade Shi'ite militias called "special groups" for the bombing. That is jargon for rogue elements of Sadr's Mehdi Army militia that the military says are equipped, trained and funded by Iran. Tehran denies the charges.

U.S. forces also blamed a special group cell for a truck bomb that killed 63 people in a Shi'ite neighbourhood of Baghdad a week ago.

U.S. Secretary of State Condoleezza Rice said the deaths of the U.S. civilians, one from the State Department and the other from the Defense Department, were "a terrible reminder of the dangers that our colleagues face daily in advancing our critical foreign policy goals".

The U.S. military said a suspect who had tested positive for explosives residue had been caught trying to flee the scene. That suggests a bomb was planted in the council building.

Lieutenant-Colonel Steven Stover, a U.S. military spokesman, said the target of the attack was believed to be a high-ranking council member. It was unclear if that person survived.

Stover said the rogue Shi'ite militant groups were unhappy the council member was working with U.S. forces.

Mahmud al-Zamili, a member of Sadr City's council, said the blast occurred inside the office of the deputy head of the council. Police said the deputy was among the wounded.

"Special groups are afraid of progress and afraid of empowering the people," Lieutenant-Colonel John Digiambatista, operations officer, 3rd Brigade Combat Team, 4th Infantry Division, said in a statement.

The U.S. military commander in Iraq, General David Petraeus, told U.S. lawmakers in April that the "special groups" were the greatest long-term threat to the viability of a democratic Iraq.

MILITIA BASTION

Sadr City is the bastion of Sadr's Mehdi Army militia, where battles between gunmen and security forces raged for weeks until a truce took effect in May.

Scores of Americans work closely with local authorities across Iraq in an effort to improve governance and restore essential services following five years of war.

Those efforts have picked up as violence has dropped.

Senior Iraqi officials have stressed it is vital to restore government services quickly in Sadr City, a Shi'ite slum, now that fighting has ended, to give residents an alternative means of support besides the Sadrist movement and the Mehdi Army, which dispenses food and other supplies.

There has been little central government control over Sadr City for years. Some 2 million people live in the area.

Prime Minister Nuri al-Maliki has sought to weaken the stranglehold of the Mehdi Army and other Shi'ite militias with a spate of military operations in areas where they have held sway, including Baghdad and the southern cities of Basra and Amara.

Iraqi and U.S. forces have also launched a crackdown against al Qaeda in the northern city of Mosul, which U.S. officials describe as the last major urban stronghold of the Sunni Arab insurgents in Iraq. But regular attacks continue there.

On Tuesday, a car, driven by a suicide bomber, exploded near a police station in Mosul, 390 km (240 miles) north of Baghdad, killing a policeman and a child and wounding 73 people, including seven policemen, police said.

The U.S. military said as many as 90 civilians were wounded in the bombing, which it blamed on al Qaeda. It said a coffee shop was destroyed by the blast.

U.S. officials said U.S. President George W. Bush would meet Iraqi President Jalal Talabani in Washington on Wednesday to discuss a long-term security pact for U.S. forces to stay in Iraq and other issues.

"The U.N. mandate expires at the end of this year. The Iraqis have told us they do not want to renew that mandate," said White House spokesman Gordon Johndroe.

"Their preference is to set an agreement with the United States for future involvement in Iraq and so I'm sure (Bush and Talabani) will discuss that." (Additional reporting by Wisam Mohammed, Khalid al-Ansary, Tim Cocks and Adrian Croft; editing by Alison Williams)

AlertNet news is provided by