The bodies of more than 50 men, women and children have been recovered from the River Tigris in the town of Suwayra, south of Baghdad.
Iraqi troops found no trace of the hostages in a raid earlier this week
Many had been badly mutilated, Iraqi authorities said.
President Jalal Talabani said the bodies were those people taken hostage and killed in the town of Madain.
But police officials said some of the bodies are badly decomposed and have been pulled from the river over a period of about seven weeks.
There were at least three blasts in Baghdad, including one inside the heavily fortified Green Zone.
A police officer was killed when a suicide bomber struck at an outer checkpoint on the way to the party headquarters of interim Prime Minister Iyad Allawi.
Earlier, a child and another civilian were killed in separate bomb attacks aimed at US troops or Iraqi police.
And in the town of Haditha, north-west of Baghdad, at least 19 men were found dead at a football stadium.
They had apparently been lined up against a wall and shot.
The interior ministry said they were Iraqi soldiers who had been abducted by insurgents while travelling to Haditha.
Suwayra is downstream from the town of Madain, where there was tension over the weekend after reports that Sunni Muslim militants had taken a large number of Shia Muslim residents hostage.
It is not clear when the killings took place, though police in the area told the BBC the bodies had been pulled from the river over a period since the end of February.
Some victims were said to have had their heads cut off and others were badly decomposed.
Mr Talabani confirmed the discovery.
"More than 50 bodies have been brought out from the Tigris, and we have the full names of those who were killed and those criminals who committed these crimes," he said.
"We will give you details in the coming days... terrorists committed crimes there [in Madain].
The town of Madain had been reported to be in the hands of militant Sunni insurgents earlier this month.
When government forces moved in and took control on Monday, they encountered no resistance, nor could they find any trace of hostages.
But Mr Talabani insisted there had been trouble in the town.
"It is not true that there were no hostages," he said.
"There were, but they were killed and they threw the bodies into the Tigris."
The Arabic TV channel al-Arabiya said its cameras had filmed the bodies lying on the river bank.
"We discovered bags with the slaughtered children inside them," local policeman Riyadh Sakhi told al-Arabiya.
"There were two girls. One was a student and the other was very young. We discovered bags with slaughtered and beheaded young people. We discovered a large number of unidentified bodies."
Police said they had then been buried in mass graves.