The explosion rocked the centre of Khanaqin, a town in the restive province of Diyala near the Iranian border, police Colonel Azad Issa told AFP, adding that another 39 people were wounded.

"A woman and a child were among those killed in the blast," Issa said.

The pilgrims, known as Faylis, were headed to a local husseiniyah (religious hall) when the blast occurred, he said, adding that the bomb was hidden in a rubbish bin by the side of a road.

The last major bomb attack in Khanaqin was on November 18, 2005, when 78 people were killed and scores wounded.

Shiite pilgrims have been frequently targeted in Iraq during Ashura, the holiest mourning ceremony on their religious calendar.