At least 20 people have been killed and more than 100 injured in clashes between Spanish-led troops and Iraqi demonstrators in the city of Najaf.
Moqtada Sadr supporters want US-led forces out of Iraq
One soldier from El Salvador and one from the US were reportedly killed in the firefight, which broke out when Shia protesters marched on their base.
The crowd were protesting in support of firebrand cleric Moqtada Sadr.
The US administrator in Iraq, Paul Bremer, said protesters had "crossed the line and moved to violence".
The BBC's Barbara Plett in Baghdad says the clashes marked the most serious confrontation between the occupation forces and members of Iraq's Shia majority.
The Spanish Defence Ministry corrected an earlier statement that four Salvadoran soldiers had died in the unrest, saying two soldiers - a Salvadoran and an American - died and nine were injured.
Days of protests
The protest took place outside the garrison of the Spanish military contingent, who lead the coalition forces in Najaf.
Troops from El Salvador and other Spanish-speaking countries are also based at the camp.
One report said Spanish forces were pelted with stones, and responded by opening fire.
But one of the marchers, Hussein Ali, said the first shots came from the demonstrators.
"Some protesters, who were armed, fired toward the Spanish troops, who responded by firing on the crowd. It was carnage," he said.
At least some of those on the march were armed members of Moqtada Sadr's banned Mehdi Army militia.
The demonstrators joined the protest after hearing that one of his senior aides, Mustafa al-Yacoubi, had been arrested.
Spanish troops in the area said they had no
information on the arrest.
The past few days have seen a number of demonstrations by Moqtada Sadr's followers, against the arrest of his aide and the closure of a pro-Sadr newspaper.
Mr Bremer said Iraqi people had acquired freedoms, but that they must be exercised peacefully.
"This morning in Najaf a group of people crossed the line and moved to violence. This will not be tolerated", he said.
On Sunday demonstrations by Shia radicals also erupted in Baghdad, and in the south of the country.
Protests erupted across Iraq
Gunfire broke out in the Baghdad protest, and British troops were involved in clashes in Amara in the south.
"We understand there are Iraqi casualties," a military spokeswoman in London said of the Amara clashes which she said began when soldiers returned fire after coming under attack.
In Baghdad, a spokesman for Mr Sadr said he had called for an end to protests, asking his supporters instead to gather at his offices or in mosques.
"Terrorise your enemy, as we cannot remain silent over its
violations," his statement said.
It is not clear from the translation of his statement whether the cleric was
literally calling on his followers to resort to violence.
But there was no doubt about the militancy of some of his supporters.
"Sheikh Moqtada Sadr is our leader. He's going to lead Iraq. Today we fought the occupation troops and we will keep fighting them until we take over," said 23-year-old Mohammad Hanoun, a protester wielding a chain in Baghdad.
US marines killed
The American military said on Sunday that two US marines had been killed in the province of Al-Anbar, a hotbed of anti-coalition violence.
"One marine was killed in action yesterday. The other marine died today from wounds received in separate action yesterday," it said in a statement on Sunday.
The US military declined to give any further information on the latest incidents for security reasons.
The US has lost 459 service personnel in Iraq since President Bush declared major combat over on 1 May 2003.
In Samarra, about 100km (60 miles) north of Baghdad, a bomb exploded near a checkpoint manned
by Iraqi Civil Defence Corps personnel, killing three of them and wounding one, local hospital workers said.
And a car bomb exploded in the northern Iraqi city of Kirkuk. There were conflicting reports about casualties. Iraqi police said the target appears to have been a US convoy.