The attack occurred Wednesday at the Camp Victory, a sprawling garrison that houses the headquarters of American forces in Iraq, according to a statement. The military says insurgents fired rockets on the camp from a nearby abandoned school.
Two coalition force members were killed and 38 wounded, the military said. It also said two "third country nationals" were wounded. It did not identity them further, but military spokesman Lt. Col. Rudolph Burwell said the term usually refers to foreign contractors and not Iraqis or Americans.
The attack is under investigation, the statement said.
CBS News national security correspondent David Martin reports that because of the timing and accuracy of this latest attack, some officials suspect a spy inside Camp Victory is telling the enemy exactly when and where to aim.
Most troops stationed at Camp Victory are American but other coalition soldiers are based at the complex near Baghdad International Airport. No further details on the attack were immediately released.
Camp Victory and other U.S. bases in Iraq have frequently come under fire, but attacks with such a large number of casualties are rare.
On Sept. 11, one person was killed and 11 were wounded in a rocket attack. The U.S. military said a 240 mm rocket provided to Shiite extremists by Iran was used in that attack.
The U.S.-protected Green Zone, which houses the American and British embassies and the Iraqi government headquarters, is far more vulnerable as it is situated in central Baghdad.
In other recent developments:
The scrutiny of Unity Resources Group began a day after its guards allegedly gunned down the two women in their car, and less than a month after 17 Iraqis died in a hail of bullets fired by Blackwater USA contractors at a busy Baghdad intersection.
At a funeral in Baghdad's Armenian Orthodox Virgin Mary church on Wednesday, the Rev. Kivork Arshlian urged the government to punish those responsible. The immunity enjoyed by foreign security contractors in Iraq should be lifted, he said.
"This is a crime against humanity in general and against Iraqis in particular. Many other people were killed in a similar way," he said. "We call upon the government to put an end to these killings."
His comments reflected growing anger here against the contractors - nearly all based in the United States, Britain and other Western countries.
As the largest security firm operating in Iraq, much of that rage has been directed at, which protects U.S. diplomats as they move about on Baghdad's dangerous streets. An Iraqi investigation into the Sept. 16 killings recommended that the U.S. State Department sever all contracts for the company's operations in Iraq within six months.
A top aide to Prime Minister Nouri al-Maliki told The Associated Press the U.S. government is considering meeting the demand.
"They have seen that the Iraqi government is serious and inflexible on this issue. But so far there has been no concrete answer from the U.S. Embassy showing it was definitely going to drop Blackwater," the aide said on condition of anonymity because of the sensitivity of the issue.
The aide said the al-Maliki government told the embassy, "We will draft and pass laws that would lift the immunity on these security companies to stop their reckless behavior."
The embassy declined to comment.
According to witnesses and police, the Armenian Christian women died when their white Oldsmobile was struck by bullets from two Unity guards as the convoy was returning to a company compound in the Karradah district.
"We cannot say the guards shot at random, but we rather say that they used deadly force in a situation where they shouldn't have," said government spokesman Ali al-Dabbagh. "The preliminary investigation has shown that there was no threat to the convoy. The families of the victims will be summoned according to the legal procedures. They can file a law suit against the security company."
Unity Chief Operating Officer Michael Priddin said company officials had "been meeting with Iraqi authorities throughout the day and are cooperating with their investigations."
"The security team used graduated and escalated responses which included non-lethal means such as signage, strobe lights, hand signals, and a signal flare fired in front of the vehicle in an effort to get it to stop," Priddin said in a statement Wednesday night. "The vehicle did not heed these warnings and failed to halt. Fearing a suicide attack, only then did the team use their weapons in a final attempt to stop the vehicle."
Witnesses, however, said the women's car appeared to be attempting to stop when it was hit.
U.S. military spokesman Maj. Gen. Kevin Bergner said the incident is being investigated.
Unity, which is owned by Australian partners but with headquarters in the United Arab Emirates, provides protection for USAID contractor RTI International. According to the USAID Web site, RTI has about $450 million in U.S. government contracts to work on local governance projects in Iraq. USAID is a semiautonomous arm of the U.S. State Department that manages American aide programs.