Iraqi officials say at least 147 people have been killed by two powerful suicide car bombs, in the country's deadliest attack in more than two years.

At least 721 people were injured in Sunday's blasts in downtown Baghdad, only a few hundred metres from the heavily fortified Green Zone. Three of the injured are American contractors, a spokesperson from the U.S. embassy said.

The car bombs went off outside the Justice Ministry and the Baghdad Provincial Council. So far, 60 government workers have been reported dead. Thirty-five were from the Ministry of Justice and 25 were from the Baghdad Provincial Council, police and medical officials told The Associated Press on condition of anonymity.

The streets where the bombs went off were just reopened a few months ago, when blast walls were repositioned to allow traffic to flow closer to government buildings.

Iraq's Prime Minister Nouri al-Maliki had touted such a move as a sign that the city was growing more secure.

But on Sunday, he visited the scene to survey the devastation and walked among the black, mangled cars that lay in front of walls that were painted with a peaceful street scene of Iraq.

The bombings show insurgents still are capable of launching devastating attacks, even as violence has dropped dramatically in recent years.

No one has claimed responsibility for the attack, but car bombs have often been used by Sunni insurgents in an attempt to destabilize the country's Shiite-dominated government.

President Barack Obama, who reiterated his commitment to withdraw more troops from Iraq earlier this week, called al-Maliki to offer condolences.

"These bombings serve no purpose other than the murder of innocent men, women and children, and they only reveal the hateful and destructive agenda of those who would deny the Iraqi people the future that they deserve," Obama said.

Under an agreement between the U.S. and Iraqi governments from last year, American forces are to withdraw from the country by the end of 2011.

Mark Plotkin, a political analyst with Washington-based radio station WTOP-FM, told Â鶹´«Ã½ Channel on Sunday that the violent bombing may come as a surprise to many Americans.

"I think that they feel 'alright, all the concentration is now on Afghanistan -- the war in Iraq is over,'" he said. "People have to face up to the reality that that war is not over, is not complete, and incidents like this will occur whether we're there or not."

"They'll just hope that there won't be any more episodes like this in Iraq, so they can go ahead and abide by the schedule they've said they want to abide by," he said.

With files from The Associated Press