The U.S. military said U.S.-backed Iraqi soldiers arrested a wanted insurgent leader suspected of training roadside bomb cells in an operation Friday that killed an armed man who opened fire on the troops.
The IIP alleged that a senior member of the party was killed in his bed and five others were arrested during the raid in the Halabsa area on the outskirts of the former insurgent stronghold.
It accused the troops of targeting party members after its success in forging tribal alliances with other political blocs.
"The hidden political motive behind this incident is clear," the party said in a statement posted on its Web site.
The party said it "has decided to suspend all official contacts with the Americans, both military and civilians, until the party receives a reasonable explanation about what happened, along with an official apology."
It also demanded assurance those responsible would be punished, compensation for the victims and the release of the five detainees.
Supporters of the Iraqi Islamic Party rallied Saturday in Fallujah to protest the raid.
The IIP has been locked in a bitter rivalry with Sunni tribal leaders who joined forces with the United States against al-Qaida in Iraq in so-called Awakening Councils that started in Anbar and spread to other Sunni areas.
That has raised concerns that the political tensions could lead to new violence by disrupting the Sunni revolt, which is considered a key factor in recent security gains.
American forces handed over security responsibility for the province to the Iraqis on Sept. 1 but they retain a presence in Anbar, which stretches west from Baghdad to the borders with Syria, Jordan and Saudi Arabia.
Also Saturday, about 300 Shiites rallied in the southern city of Basra against a U.S.-Iraqi security pact currently under negotiation.
The demonstrators were members of a local Muslim charity linked to Iraq's largest Shiite political party, the Supreme Islamic Iraqi Council, or SIIC.
The council has not decided whether to support the security agreement, and its decision will be crucial in determining whether it wins parliamentary approval. Critics oppose the pact as an infringement of national sovereignty.
Demonstrators raised banners that read "No to the agreement of humiliation" while chanting "No to America."
Negotiators face a Dec. 31 deadline to reach agreement on the pact, which is aimed at replacing the U.N. mandate for foreign forces in Iraq that expires at that time.
The proposed deal calls for all U.S. combat forces to be removed from Iraqi cities by June 2009 and for all forces to leave the country by the end of 2011, unless both sides agree to an extension.
Opposition from members of Sayyid al-Shuhada, a charitable organization in Basra, is significant because the protests against the deal so far have largely been led by followers of anti-U.S. cleric Muqtada al-Sadr.
Iraq's Cabinet decided Tuesday to ask the U.S. for changes to the draft agreement as key Shiite lawmakers warned the deal stands little chance of approval as it stands.
The decision also raised doubts that the agreement can be ratified before a new American president is elected next month.
In violence Saturday, a bomb attached to a car exploded near Andalus Square in central Baghdad, killing a brigadier general and wounding his guard and a civilian bystander, according to police and hospital officials.
Defense Ministry officials could not be reached for confirmation or more details.
Elsewhere in Baghdad, a roadside bomb struck an Iraqi army patrol, killing one soldier and wounding three others, a police official said.
The Iraqi officials all spoke on condition of anonymity because they weren't authorized to release the information.