Twelve bodies were found near Baghdad

Baghdad - Residents of a town north of Baghdad found 12 corpses with execution-style bullet wounds on Monday following fighting between rival Sunni insurgents that could eventually unravel a coalition which has seized much of northern and western Iraq.

The incident points to an intensification of infighting between the Islamic State and other Sunni

groups, such as supporters of former dictator Saddam Hussein, which rallied behind the al-Qaeda offshoot last month because of shared hatred for the Shi'a-led Iraqi government.

Police in Muqdadiya, a town 80km north-east of the capital, said residents from the nearby town of Saadiya found the 12 corpses on Monday after fighting overnight between Islamic State fighters and the Naqshbandi Army, a group led by Saddam allies.

Since the Islamic State swept through Iraqi cities and proclaimed its leader caliph of all Muslims last month, there have been increasing signs of conflict with other Sunni groups which do not necessarily share its rejection of Iraq's borders or its severe interpretation of Islam.

Washington, which recruited other Sunni fighters to defeat al-Qaeda during the US surge offensive in 2006-2007, hopes other Sunnis will again turn against the Islamic State and can be lured back into a power-sharing government in Baghdad.

The White House has pressed for an inclusive government but so far Shi'a Prime Minister Nuri al-Maliki has ignored calls from Sunnis and Kurds to step down in favour of a less polarising figure who would allow Sunnis a greater voice.

Saadiya, a mostly Sunni town, was overrun by Islamic State militants on June 10, the same day the city of Mosul fell to the insurgents. It is in Diyala, a mainly rural province where lush irrigated fields have long sheltered armed groups that resent the arrival of outsiders.

Residents say the town is a stronghold of Naqshbandi Army fighters who supported the Islamic State when it swept into the area, but have since clashed with the group.

A doctor in the Baquba morgue, where the corpses were taken, said the men all bore bullet wounds to their heads and chest, though there was no sign of torture. He said the men had been dead no more than 24 hours.

The people who found the bodies said the men were Naqshbandi fighters in their 20s and 30s, and blamed the Islamic State for the execution-style killings. The Saadiya residents brought the corpses to police in Muqdadiya because the police in their town fled on June 10 when the insurgents swept in.

Local government official Ahmad al-Zarghosi, who also fled, told Reuters that he estimated 90 percent of the town had left to the north. Zarghosi, speaking from the town of Khanaqin, said fighting had been raging for a week between Naqshbandi locals and the Islamic State militants.

Though local people said the Naqshbandi Army enjoys strong support in Saadiya, the Islamist militants are far better equipped. They have been seen with heavy weapons and military vehicles including Humvees in towns they seized last month, equipment apparently taken from the army which received billions of dollars' worth of US hardware in recent years.

Infighting between Sunni insurgents could doom their attempt to reach Baghdad, as well as prospects for consolidating control under the Islamic State's black flag in regions they have taken.

Though the Islamic State, then known as the Islamic State in Iraq and the Levant (ISIL), led last month's offensive, it relied on support from fellow Sunnis eager to drive out forces loyal to Maliki's government.

A key ally for ISIL was the Naqshbandi Army, believed to be led by Ezzat Ibrahim al-Douri, Saddam's former deputy and the only top member of the dictator's entourage still at large since the 2003 US-led invasion that toppled him.

An audio recording of Douri's voice surfaced on a website loyal to Saddam's ousted Baath Party on Saturday night with a message heaping praise on the al-Qaeda offshoot, although apparently acknowledging divisions among insurgent ranks. The authenticity of the recording cannot be verified.

Iraq's national army and allied Shi'a militias have been fighting the Islamic State for days over a military base next to Muqdadiya and trading control of nearby town of Sadur, which Maliki's military spokesman said on Sunday the army had retaken.

The bodies of three Sunni men arrested on Sunday in Muqdadiya on terrorism charges by Iraqi SWAT forces turned up dead in the town of Abu Saida 10km away, police said. A morgue official in Baquba said the men had been shot in the head and chest. Further details were not immediately available.

In the Kurdish controlled-town of Qara Tippa near the Iranian border, two members of Kurdish peshmerga forces were killed and five others wounded when a suicide bomb attack hit their local headquarters.

Though the front line has yet to reach Baghdad, frequent bomb attacks are striking the capital. Three separate explosions occurred before nightfall on Monday, killing at least eight people and wounding more than 20.