The shooting occurred at a checkpoint manned by soldiers from the US Army's Third Infantry Division at Najaf, 150 kilometers (95 miles) south of Baghdad, on Monday afternoon, Navy Lieutenant Commander Charles Owens said.

He said the victims, women and children, were in a vehicle that failed to stop despite repeated warning shots fired by US troops. Four people in the vehicle escaped unharmed.

"As a last resort, they (US troops) fired into the passenger compartment of the vehicle," Owens said at US Central Command's forward planning base here.

"When soldiers opened the vehicle, they found 13 women and children inside. Seven of the occupants were dead, two were wounded and four were unharmed."

As civilian casualties mount in Baghdad, where US and British forces are carrying out day and night air strikes, the checkpoint shooting was seen as dealing a further blow to US efforts to win the affection of the Iraqi people.

"On the hearts and minds front, the war is still not going particularly well for the coalition," said Alan Dupont of the Strategic and Defense Studies Center at the Australian National University.

Australia has committed 2,000 troops to the US-led invasion of Iraq aimed at ousting President Saddam Hussein.

"That point was illustrated by the unfortunate deaths of a number of women and children who were killed when their vehicle failed to stop in the early hours of this morning.

"That, of course, is a public relations disaster for the coalition and does illustrate the dilemma they face in conducting this war.

"While militarily they appear to be regaining the initiative, they've still got a lot of ground to make up on the public relations psychological warfare front."

The US spokesman said an investigation had been opened into the shooting.

He said the vehicle had approached the checkpoint on Route 9 in Najaf and was motioned to stop by US troops. When it kept going a warning shot was fired, which failed to halt its progress, after which soldiers fired into the engine.

When that too had no effect, troops opened fire on the passenger compartment, Owens said.

A written statement issued by Cental Command later said "initial reports indicate the soldiers responded in accordance with the rules of engagement to protect themselves.

"In light of recent terrorist attacks by the Iraqi regime, the soldiers exercised considerable restraint to avoid the unnecessary loss of life."

The shooting came as US forces in Iraq were on an increased state of alert following a suicide car bombing, also near Najaf, on Saturday that killed four US soldiers.

On Monday, a senior US commander, Brigadier General Vincent Brooks, told reporters here that US troops were displaying a "heightened awareness" in their encounters with Iraqi civilians as they tried to determine "whether a threat is posed or not".

"In some cases there may be a threat and a non-threat in the same action coming toward you. It's very, very difficult to sort that out."

WAR.WIRE