BAGHDAD, June 18: A US soldier killed two protesters during a confrontation with former Iraqi soldiers in Baghdad on Wednesday and an American soldier was killed in a drive-by shooting in the city centre.

US military officials said the soldier had acted in self- defence after a military convoy came under a hail of stones as it drove through the crowd into the former presidential compound now housing Iraq’s new rulers.

It was the first time troops are known to have fired on any of the noisy protests staged in Baghdad in the 10 weeks since US-led forces toppled Saddam Hussein. Troops killed 15 Iraqis in clashes with crowds in the city of Falluja in April.

Up to 2,000 former Iraqi soldiers protested in Baghdad’s fierce midday heat against their dismissal by the new US-led administration.

“There is no god but Allah, America is the enemy of Allah!” the crowd chanted after the shooting. “Down, down USA!”

Soldiers lost their jobs when US administrator Paul Bremer dissolved Iraq’s armed forces last month, along with security agencies and the information and defence ministries.

Mr Bremer’s drive to destroy the legacy of Baathist rule has laid off up to 400,000 Iraqis who worked in those now disbanded institutions, with little prospect of reintegration.

“We were in a peaceful demonstration asking the US to give us our salaries,” said Abdul-Rahim Hassan. “We were not fighting them, but suddenly they started shooting at us.”

US Army Captain Scott Nauman, whose troops were guarding the compound, told CNN television that Iraqis across the street had been throwing stones for nearly an hour before the shooting.

He said the Iraqis had “swarmed the convoy, shaking the vehicles, breaking out windows, throwing rocks at extremely close range to the personnel in that convoy.

“(They) felt threatened, understandably...and they fired shots then directly into the crowd and injured two personnel...To me it appeared to be in self-defence.”

The captain said his men had fired warning shots over the crowd at the same time. Asked if there had been shooting from the crowd, he replied: “No, not to my knowledge.”

However, a US military statement later said the troops had responded only after one demonstrator “pulled out a weapon and began shooting”. It said the two men were taken to a battalion aid station and confirmed dead.

Earlier the protesters had beaten passing United Nations and press vehicles with their shoes and assaulted journalists.

Critics say Mr Bremer’s sweeping “de-Baathification” policy fails to distinguish between the hard men who enforced Saddam Hussein’s orders, the many who joined the party out of expediency and some genuine adherents to its Arab nationalist ideology.

They say the policy has created a large pool of armed and resentful unemployed who may turn to crime or to fighting the US-led occupation, perhaps as part of a Baathist underground.

Nauman said the demonstration was the fourth by Iraqi soldiers in the past few weeks.

In a separate incident, a US soldier was killed and another wounded by gunfire from a car passing the petrol station they were guarding in central Baghdad. Both soldiers were from the First Armoured Division, a US military spokesman said.

At least 42 American soldiers have been killed in a spate of attacks in and around Baghdad since US President George Bush declared major combat over in Iraq on May 1.

TALKING RECONSTRUCTION: Not far from the scenes outside Paul Bremer’s headquarters, Bechtel, the US firm named as prime contractor for rebuilding Iraq, was holding a conference with Iraqi businessmen who want a slice of the action.