The attack took place as chief administrator L. Paul Bremer was in Washington for urgent talks on the worsening political and military situation in Iraq. U.S. officials have complained of the slow pace of decision-making in the U.S.-appointed Governing Council, Iraq's interim leadership.
A Carabinieri official in Rome, Maj. Roberto Riccardi, confirmed that 14 Italians were dead: 11 Carabinieri paramilitary police and three Army soldiers.
A coalition spokesman said some Iraqis were also killed.
Riccardi, said the building was in flames, and that some Italians may be under the debris, although details were difficult to come by because communication had been severed.
In other developments:
The urgency of Bremer's visit Tuesday was underscored when he abruptly canceled a planned meeting in Baghdad with the visiting Polish prime minister before heading to Washington. At the White House, he met with Secretary of State Colin Powell, Defense Secretary Donald Rumsfeld, National Security Adviser Condoleezza Rice and other top officials.
U.S. officials have had growing concerns about the performance of the governing council, a senior administration official said, particularly the lack of progress toward a Dec. 15 deadline to set a timetable for writing a new constitution and holding democratic elections.
Some officials believe that key members of the Iraqi council are stalling in hopes of winning concessions from American leaders. Bremer has expressed frustration to members of Congress that council officials are not working hard enough.
Chief White House Correspondent John Roberts reports the Bush administration is considering a change in plan, however: Some transfer of sovereignty to the Iraqi people before a constitution is written.
One option under consideration: naming a new interim Iraqi leader with authority to govern the country until a constitution can be written and elections held, a Bush administration official said. That would be patterned after the model of Afghanistan.
Some critics have proposed the recall of Iraq's army, disbanded shortly after the war. Pentagon officials and Bremer's aides have called that unworkable.
No decisions were made Tuesday, several Bush administration officials said.
"The notion that we are about to throw the council to the wolves is exaggerated," a senior administration official said, speaking on condition of anonymity. "But there is a need to put some energy into the political transition."
On Wednesday, a member of the council said the body was not to blame for the lack of progress in drafting a new constitution that would enable democratic elections and a return to Iraqi independence.
"This is supposed to be a partnership based on equality," Othman said in an interview. "But when Americans want to find solution for their problems, they do it in any way that suits them."
Bremer has the right of veto over council decisions, while U.S.-led coalition forces have the ultimate responsibility for security.
Frustration over the U.S.-appointed council has emerged at a time of escalating attacks by Iraqi insurgents, most recently a mortar barrage late Tuesday against the coalition headquarters compound. No injuries or damage were reported. Two similar attacks occurred last week.
Since August, vehicle bombs have targeted several international buildings, including the United Nations headquarters, the offices of the international Red Cross, the Baghdad Hotel and the Turkish and Jordanian embassies in Baghdad.
But Wednesday's was the first attack in Nasiriyah, a Shiite city about 180 miles southeast of Baghdad, since the end of active combat May 1.
The explosion occurred at about 10:40 a.m. Iraqi time at the Carabinieri's multinational specialist unit in the southern city of Nasiriyah, the Italian paramilitary police said in a statement.
Andrea Angeli, the coalition spokesman, said the blast occurred after a truck rammed the gate of the Italian compound and exploded in front of the Carabinieri building. He said the force of the explosion was so strong that it blew out windows in another building across the Euphrates River.
The three-story building, formerly used by the Iraqi chamber of commerce, was devastated.
Italy has sent about 2,500 troops to help the reconstruction in Iraq. About 300 Carabinieri are based in the Nasiriyah camp, along with 110 Romanians. Everyone was believed to have been inside the building at the time of the blast, because it occurred early in the morning, Riccardi said.
Italian President Carlo Azeglio Ciampi called the bombing a "terrorist act" and said it wouldn't deter his nation's resolve to fight terror.