Fighting between Shiite militiamen and US and Iraqi forces in Baghdad's sprawling Sadr City district raged through the night, killing three people and wounding 36, officials said.

The fighting, which killed 20 people on Sunday, has brought the impoverished township of two million people to a standstill, with the main market burnt out, water in short supply and electricity non-existent, residents said.

"There were sporadic clashes over the last 12 hours and three people have been killed and 36 others wounded," a medic at a local hospital said.

The clashes came just two days before a massive anti-American protest on Wednesday in Sadr City called by radical cleric Moqtada al-Sadr, whose Mahdi Army militia dominates the district.

The Sadr group expects at least a million protesters to attend the demonstration on the April 9 fifth anniversary of the toppling of Saddam Hussein's regime by invading US-led forces.

The firefights on Sunday set ablaze the Jamila food market in Sadr City, one of the biggest markets in Iraq.

Sadr City resident Hassan Abdul Hadi said the market was deserted on Monday with most shops either burnt or closed.

"There has been no electricity for the past two days and there are sporadic clashes going on," he told AFP, adding that US snipers had taken up positions on the rooftops of houses on the edge of Sadr City.

Shiite militiamen, most of them loyal to Sadr, have been clashing with security forces since March 25 when Prime Minister Nuri al-Maliki ordered a crackdown on "lawless gunmen" in the southern city of Basra.

The fighting then spread to Sadr City in Baghdad and other Shiite areas of Iraq, with at least 700 people killed countrywide since then.