The U.S. military said they had killed three "terrorists".

"They call everybody terrorists but they just commit terrorist acts whenever they want," said Mohsen Thabit, a friend of the men whom neighbours found shot in the head at home after a raid by U.S. and Iraqi troops in the Amiriya district overnight.

The bodies of Khalil, Khalid and Jamal Hussein, filmed by a neighbour, lay sprawled in their home, that of the crippled Khalil lying in the bathroom next to his wheelchair.

U.S. spokesman Major Tim Keefe confirmed U.S.-led and Iraqi forces raided a house the neighbourhood around midnight.

"The purpose of the raid was to capture and detain a kidnapping cell. A firefight ensued, and three terrorists were killed and one wounded. Weapons and explosive materials were captured," he said by e-mail in reply to a question.

Parts of Amiriya have been strongholds for Sunni Arab insurgents seeking to topple the U.S.-backed Iraqi government.

Whatever the reasons behind the incident, however, neighbours and relatives were quick to accuse Americans and the new Iraqi forces they are training of carrying out an unprovoked killing, a common complaint in a violent city and one that has fuelled resentment in many quarters towards occupying forces.

The reaction underlines how far U.S. and, now, Iraqi troops are struggling to gain public trust after two years of war.

The dead men's sister-in-law said she saw U.S. and Iraqi troops raid the house and shoot her husband's brothers.

"They shot one of my brothers-in-law in the bathroom and then they shot the other two. I was hit in the arm and foot," Noor Ali Jassim told Reuters from a hospital bed.

It was not clear if she was the wounded person referred to in the U.S. statement. She was not under guard in hospital.

Video footage taken by residents showed three bodies on the floor, including Khalil Hussein who lay face down in the bathroom near a wheelchair. Friends said the man had been unable to walk since being wounded in the war with Iran in the 1980s.

HEARTS AND MINDS

U.S. troops hope Iraqi security forces will eventually take over the fight against guerrillas and enable them to go home.

However, passions aroused by incidents such as that at the Hussein home pose questions over their ability to win hearts and minds.

"Amiriya will not be silent," said neighbour Akram Khalil.

U.S. and Iraqi troops say they are under strict orders to respect human rights but Iraqis often complain they are too quick to draw their weapons. In such cases, troops generally say the casualties have been suspected of being suicide bombers.

Among accusations of civilians being killed in raids, Iraq's ambassador to the United Nations alleged last month that U.S. Marines shot dead his unarmed cousin in cold blood at his home.

More than 20 labourers were treated in hospital in Baghdad this week after a U.S. helicopter opend fire as they slept on a rooftop at dawn. The military said its aircraft returned fire against "terrorists" but added there were civilian casualties.

In Amiriya, relatives wept as they prepared the brothers for burial. One man lifted blankets, exposing devastating skull wounds; "He is a cripple. He has been handicapped for the past 25 years," he said, standing over Khalil's bloodied corpse.

Facing determined guerrillas, Iraqi leaders are struggling to write a draft constitution they hope will foster peaceful politics after decades of one-party rule. However, promises of democracy failed to calm the nerves of hundreds of people at the Hussein funeral procession.

"They will never be let back into Amiriya," screamed a hysterical man, referring to U.S. forces. Mourners threw stones at U.S. patrol vehicles as they drove past the procession.