BAGHDAD - At least 25 people were killed and many wounded by an explosion which tore through the headquarters of a Kurdish party in Baghdad on Tuesday, police at the scene said.

The blast was at the offices of the Patriotic Union of Kurdistan, close to Iraq's Foreign Ministry and an entrance to the "Green Zone" compound where the U.S.-led administration in Iraq is based. Shooting rang out after the explosion.

Policeman Sattar Jabar said he had seen at least 25 bodies and that more than 20 people had been wounded.

A huge crater was blown into the ground at the entrance to the building.

The blast came as U.S. and Iraqi officials announced the names of an Iraqi government due to formally take over sovereignty from the occupying powers on June 30.

Saad Adnan a driver at the transport ministry, said he was driving past the PUK headquarters when it was hit by the blast.

He said guards at the building opened fire after the blast, killing some bystanders.

Adnan said he saw several bodies. "One of the dead was a woman. Only her head was left," he said.

© Reuters Ltd 2004

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