The trigger has been accusations of Jordanian involvement in a deadly suicide bombing, which has seen hundreds of angry Shi’ites demonstrate outside the Jordanian embassy in Baghdad.

The first move in the diplomatic war was made by Amman when it recalled its representative, saying conditions in Baghdad were “unsafe”.

Iraq’s interim government quickly retaliated, announcing it was recalling its ambassador from Amman.

‘”We will recall our ambassador from Amman for consultations,” a foreign ministry official told the AFP news agency.

“Relations between the two countries are in crisis mode.”

The family of Jordanian Raed el-Banna have denied Iraqi media reports their son was responsible for last month’s attack and stories they held a memorial service for him to honour him as a “martyr”.

The bombing in the Iraq village of Hilla was the deadliest single attack in Iraq since the fall of Saddam Hussein.

In marking the second anniversary of the US-led invasion, at least 45 people died in violence across the country, with insurgents again targeting Iraq’s fledgling security forces.

In the northern city of Mosul, a suicide bomber killed the chief of Iraq’s anti-corruption department, General Walid Kachmoula.

An al-Qaeda linked group claimed responsibility, saying it had killed “the apostate Walid Kashmoula who is the top American agent” in the area.

The attackers struck again hours later, opening fire on his funeral procession and reportedly killing two people and wounding 14.

On the outskirts of the capital Baghdad, the US military said it killed 24 Iraqi insurgents in a gun fight that saw six coalition soldiers wounded.

In the northern oil centre of Kirkuk, a US soldier was killed and three others wounded by a roadside bomb.

Despite the continuing high casualty toll, Washington continues to hail Iraq’s liberation with US Defence Secretary Donald Rumsfeld insisting major progress had nonetheless been achieved.

“It’s a wonderful thing to see 25 million Iraqis liberated, to see their economy improve as it has been, to see their political process move toward democracy,” he told Fox News.

Amid worldwide protests, US President George W. Bush praised the invasion, calling Iraq a beacon of democracy in the region.

“Only the fire of liberty can purge the ideologies of murder by offering hope to those who yearn to live free,” he said in his weekly radio address.

But the ousting of Saddam Hussein’s regime has come at a price.

Around 11,000 American troops have been wounded and over 1,500 been killed in the conflict.