Ahmad al-Zarqoushi, the mayor of Saadiyah town near the Kurdish-dominated city of Khanaqin, survived, police Major Shriko Baajilan said. "The mayor and six of his men were wounded."

The attack came a day after a member of the Kurdish peshmerga security forces was killed when Iraqi police raided a peshmerga post in the nearby troubled town of Jalawla, also near Khanaqin.

Tension is high between Iraqi forces and peshmerga who moved into the region after they were asked to help a drive against Al-Qaeda insurgents in the unruly Diyala province, where Jalawla is a Kurdish enclave.

Peshmerga are former Kurdish guerrillas who fought against the ousted regime of Saddam Hussein and led a campaign for autonomy for the Iraqi Kurdish minority in northern parts of the country.