BAGHDAD (Reuters) - A suicide bomber killed 135 people on Saturday in the deadliest single bombing in Iraq since the 2003 war, driving a truck laden with one tonne of explosives into a market in a mainly Shi'ite area of Baghdad.

The blast, which Shi'ite Prime Minister Nuri al-Maliki blamed on Saddam Hussein supporters and other Sunni militants, shattered fruit and vegetable stalls, caved in shopfronts and left the smashed bodies of shoppers strewn in the street.

It came as U.S. and Iraqi troops prepared for a planned offensive seen as a last-ditch effort to stem worsening sectarian bloodshed that kills hundreds in Baghdad every week.

"It was a terrible scene. Many shops and houses were destroyed," said one resident, Jassem, 42, who rushed from his home to help pull people from the rubble after hearing the explosion that rocked central Baghdad.

Maliki vowed in January to launch a crackdown in the capital to crush insurgents who have defied attempts by his government to get control of security, but it has not yet begun.

U.S. President George W. Bush has said he is sending 21,500 reinforcements to Iraq, most earmarked for the Baghdad offensive, despite vocal opposition at home, especially among Democrats who now control both houses of Congress.

Speaking to House of Representatives Democrats on Saturday, Bush assured them that his commitment to Maliki's government was not "open-ended" and it would have to meet certain benchmarks.

A U.S. intelligence report said on Friday that escalating violence between minority Sunni Arabs and politically dominant majority Shi'ites met the definition of civil war.

A senior Interior Ministry official, Major General Jihad al -Jaberi, told state television that the suicide bomber had driven a truck with one tonne of explosives.

"All Iraqis were shaken today by this crime," Maliki said in a statement in which he again spoke of his government's determination to crush the militants. "The Saddamists and Takfirists (Sunni militants) have committed another crime."

Police said 305 people were wounded. The casualties swamped the capital's hospitals. There were chaotic scenes at Ibn al- Nafis hospital in central Baghdad, where hallways overflowed with wounded on trolleys.

"I was in my shop and there was a great explosion and the roof fell in on me. I woke up here in hospital," said one man at the hospital with blood streaming down his face.

Emergency workers dragged bodies from the debris and piled them on pickup trucks, a Reuters reporter at the scene said.

In Washington, the White House called the suicide bombing an "atrocity" and pledged to help the Iraqi government bring security to Baghdad.

Three car bombs in the same market in December killed 51.

SPOTLIGHT ON OFFENSIVE

Saturday's blast came hours after Iraq's leading Shi'ite cleric, Grand Ayatollah Ali al-Sistani, renewed an appeal to Iraqis to avoid violence.

"Everybody knows the necessity for us to stand together and reject the sectarian tension to avoid stirring sectarian differences," his new fatwa, or religious edict, said.

In the worst previous single bombing in Iraq, a suicide car bomber killed 125 people in Hilla south of Baghdad in February 2005. In November 2006 six car bombs in different parts of the Sadr City neighbourhood of Baghdad killed 202 and wounded 250.

The latest bombing will again throw the spotlight on Maliki's planned security sweep in the capital and whether it will succeed where other similar crackdowns have failed.

His critics say an offensive last summer failed because the Iraqi army committed too few troops and because he was reluctant to confront the Mehdi Army militia of cleric Moqtada al-Sadr, a key political ally.

The Pentagon has said the Mehdi Army now poses a greater threat to peace in Iraq than Sunni Islamist al Qaeda.

A militant group linked to al Qaeda -- the Islamic State in Iraq -- vowed in a Web recording on Saturday to widen its attacks to all parts of Iraq instead of just focusing on Baghdad and would only stop when "Bush signs a surrender accord".

Bush said Maliki's government must take the lead in securing the capital and make political progress in agreeing a new oil law that sets out how revenues should be shared and amending the constitution, a demand of minority Sunnis.

In the northern, ethnically mixed city of Kirkuk, seven car bombs, including a suicide attack, killed at least four people and wounded 37. Two of the cars detonated outside the offices of the main Kurdish parties in the city. The Islamic State in Iraq claimed responsibility for the attacks in an Internet statement.

Further north, another curfew was imposed in Mosul, Iraq's third largest city, after clashes between insurgents and police erupted in several neighbourhoods.

(Additional reporting by Sherko Raouf in Sulaimaniya, Inal Ersan in Dubai, Mariam Karouny and Ibon Villelabeitia in Baghdad, and Caren Bohan in Washington)

Copyright © 2006 Reuters

Commentary: