Meanwhile, under the pressure of increasing casualties, President Bush is moving to speed up establishment of an Iraqi government to take charge in Baghdad.
The death toll from Wednesday's suicide bombing at an Italian paramilitary base rose to 31. It was the deadliest attack against a U.S. ally since the occupation began. Eighteen of the dead were Italians. Roughly 40 U.S. soldiers have been killed this month.
Hours after the bombing, U.S. forces destroyed a dye factory in southern Baghdad, setting off explosions that reverberated through the capital after nightfall Wednesday.
A Pentagon spokesman said the facility was a "known meeting, planning, storage and rendezvous point for belligerent elements" attacking coalition forces.
Apache helicopters also chased a group of men who were seen firing mortars in the northern Baghdad area. The group fled in a van, but the helicopter fired on it, killing two occupants. Troops captured several others.
The U.S. military also says several insurgents were killed when U.S. armored vehicles and paratroopers attacked a mortar crew.
In other developments:
The latest violence took place as chief administrator L. Paul Bremer was in Washington for talks with Mr. Bush and his national security advisers on ways to speed up establishing an Iraqi government to take charge in Baghdad.
With 396 U.S. casualties, shrinking support from the American public, a troubling intelligence report and a stony silence from nations that have been asked for more peacekeeping troops, Mr. Bush wants to shorten the U.S. occupation.
That involves accelerating efforts by Iraqis to take charge of security, write a constitution, hold elections and assume control over government institutions.
"We're looking at all sorts of ideas and we do want to accelerate the pace of reform," Secretary of State Colin Powell told reporters.
In Baghdad, there was disagreement among governing council members about whether to push for an interim government with more power before a constitution is written.
For months, the Bush administration has been saying Iraq must first have a constitution in place and hold elections before the U.S. would relinquish sovereignty. But disagreements on how to select delegates to a constitutional convention have blocked progress.
U.S. officials said the administration does not intend to abandon the U.S.-appointed Iraqi Governing Council but was exploring new scenarios. One option called for creating a smaller body within the 25-seat council — perhaps 10 people with expanded roles — or establishing one person as a strong leader, a senior administration official said Wednesday.
Another administration official said an interim Iraqi leader could have authority to govern the country until a constitution was written and elections held.
Currently, the Iraqi council's deadline to submit the timetable to the Security Council is Dec. 15. But with the holy month of Ramadan entering its final days and a major Muslim holiday coming afterward, the clock is ticking for resolving several contentious issues.
That leaves the council with only about 10 to 14 days to resolve the dispute, said a coalition official, speaking on condition of anonymity.
"We are in a very intense period as we come up on the Dec. 15 deadline" for the council to set a timetable for writing a new constitution and holding elections, Bremer said.
In Nasiriyah, investigators sifted through the ruins of the three-story building, used as a barracks by the Italian Carabinieri paramilitary police.
The blast wounded about 80 people, 20 of them Italians, hospital sources and Italian officials said.
Italian officials said one of those still alive has been declared brain dead. It was the worst combat loss for Italy since World War II and its first in the Iraq campaign.
Italian Defense Minister Antonio Martino blamed the attack on Saddam Hussein loyalists and al Qaeda terrorists.
Italy has "some fairly reliable intelligence information" that the Fedayeen Saddam, the ousted leader's former paramilitary force, was responsible along with "regrouped al Qaeda terrorists," he said.
There were conflicting accounts about how many bombers were involved and it was unclear whether they were included in the death toll.
Martino said a truck, followed by an armored car, approached the compound at high speed. Gunmen inside one of the vehicles opened fire at Italian troops guarding the entrance, he said. The guards returned fire, but the vehicle plowed through the gate, and then exploded, he added.
Witnesses, however, said another car ran the checkpoint, distracting the guards who opened fire. The truck with the bomb then raced into the area from the opposite direction, crashed into the gate and exploded.
Wednesday's blast from the estimated 650 pounds of explosives gouged a 6-foot-deep crater and set fire to parked cars. Secondary explosions from stored ammunition shook the area.
It was the 13th vehicle bombing in Iraq since Aug. 7, when a car exploded at the Jordanian Embassy in Baghdad, killing at least 19 people.