"There were 84 people killed and 176 wounded," said Qassim al-Mayahi, head of Al-Zahra hospital in Kut, although the health ministry said earlier that 75 people were killed in the bombing and 148 wounded.
Many of the dead and wounded were women and children, said another official at the hospital.
Police Colonel Salam Fakhri said the bombing started at 1:00 amWednesday) and lasted until 3:00 am.
"The bombing was concentrated in Al-Sharkia district as the US military felt there were a lot of Shiite militiamen in that area. It also has an office of (radical Shiite Muslim cleric and militia chief) Moqtada Sadr," he said.
Hours after the bombings, militiamen attacked and set ablaze Al-Balda police station in central Kut, killing one policeman and wounding nine others, said police Lieutenant Waqar Bashir.
Iraq's interior ministry said police arrested nearly 100 members of Sadr's militia in Kut on Thursday.
A total of about 400 militiamen of Sadr's Mehdi Army have been killed, captured or wounded in Kut, interim Defence Minister Hazem al-Shalan told a Baghdad news conference.
Sadr's private militia has since last week been locked in heavy fighting in the holy city of Najaf, west of Kut, where a major US offensive backed by Iraqi security forces to flush them out was launched on Thursday.
Kut fell briefly to Sadr loyalists during the militia's earlier uprising against the US-led occupation of Iraq in the spring.
There has been a heavy US patrol presence since Wednesday in Al-Sharkia, a densely populated Shiite district whose simple mud houses pancaked in the overnight bombing.
"We were sleeping when there was loud noise of planes above us and suddenly there were explosions," said local resident Ibrahim Sultan. "The explosion damaged my house and killed my son."
Al-Sharkia was in misery by sunrise, with grown men, women and children wiping away the tears before the wreckage of their homes as others mourned the loss of relatives.
"We never expected to see so many bodies. Our hospital beds are full and many wounded are still lying in the corridor," said Arar.
"At least 15 wounded are in the operation theatre, many of whom will have to have their limbs amputated."
Lying in the corridor was fruit-seller Karim Ghadban who was brought in unconscious, after one of his relatives was killed and eight wounded in the bombing, four of them children.
"We were sleeping on the roof as there was no electricity at night. And when I woke up I was in the hospital," Ghadban said.
Sadr's Kut office was also flattened in the bombing, said partisan Sheikh Mohammed Yihyiah.
"Our office has been destroyed because it was in the same district, fortunately there were was no one in the office, that's why we have no casualties. Perhaps they thought it would be full of militiamen," he said.
The bombing followed a day of clashes between Iraqi police and Sadr loyalists in which at least two national guardsmen and three policemen were wounded.
On Wednesday, Iraqi police and security forces battled insurgents who attacked Kut's city hall, police stations and national guard barracks, the Polish-led force in the area said in a statement.
There were casualties on both sides, it said, without giving a toll.
Mehdi Army fighters had blocked off streets and besieged the governor's office in the eastern part of the town, armed with Kalashnikov assault rifles and rocket-propelled grenades, as US planes flew overhead.
Governorate spokesman Majid Hameed said the province's governor had received a death threat for refusing to bow to demands from Sadr supporters that Kut secede from Iraq with other Shiite provinces of the south and centre.
The US-led multinational force said in the area had "increased its combat readiness" to support Iraqi security forces.