US-led forces have killed about 30 militants in the Iraqi capital, Baghdad, the US military has said.
The US military denied any women or children were killed in the raid
They said most had died in an air strike following a raid in the Shia district of Sadr City. Twelve people were also detained in the operation.
The US military said the dead were part of a network that was smuggling weapons from Iran, but witnesses said women and children were among those killed.
The violence came as Iraqi PM Nouri Maliki held security talks in Iran.
Speaking during his flight to Tehran, Mr Maliki said the main objective of the visit was to strengthen relations between the two countries.
"We want to promote economic ties and other ties that contribute to combating terrorism and its challenges," he told the Associated Press news agency.
Mr Maliki said Iraq and Iran had a "joint understanding that they are keen to solve problems and sufferings of Iraqi people".
"They are both convinced that their co-operation may lead to helping Iraq and restoring stability," he added.
US commanders have recently accused Iran of stepping up its support for Iraqi militias - allegations Iran has always denied.
On Wednesday, Lt Gen Raymond Odierno said "explosively formed penetrators" increasingly supplied by Iran were responsible for a third of US combat deaths in July.
In a statement, the US military said US and Iraqi forces had carried out an overnight raid on a group of buildings in Sadr City where members of the Mahdi Army militia were based.
US commanders said they believed the cell was smuggling weapons and explosive charges that have been used against US patrols from Iran, as well as sending militants to Iran for training.
Mr Maliki says Iran and Iraq should fight militants together
One of the main targets of the raid was a man who acted as a liaison between Iraqi militants and the elite Quds Force of Iran's Islamic Revolutionary Guards Corps (IRGC), the military said.
It said the troops came under sporadic gunfire as they approached the buildings, killed two armed men they believed to be lookouts, then detained 12 militants.
"During the course of the operation, the assault force and the overhead aerial support observed a vehicle and large group of armed men on foot attempting an assault on the ground forces," according to the statement.
It said air support was called and US aircraft killed an estimated 30 militants.
The military statement was issued after the Associated Press quoted Iraqi police as saying nine civilians, including two women, had been killed in the US operation in Sadr City.
A military spokesman said there had been women and children in the area during the raid, but denied any had died.
Hundreds of Sadr City residents protested against the strike
Later, men and young boys were seen weeping over coffins outside a nearby hospital and hundreds of residents marched through Sadr City in protest against the raid.
It came on the eve of a major Shia religious festival in the capital which is expected to draw hundreds of thousands of pilgrims.
A three-day driving curfew has been imposed in Baghdad and new checkpoints established.
Almost 1,000 pilgrims were killed at the same pilgrimage two years ago when rumours spread that a suicide bomber was amongst the crowd.