The governor of Nineveh province, which includes the town of Tal Afar, said
policemen who took part in the reprisal shootings were arrested but then freed again to prevent unrest.
Prime Minister Nuri al-Maliki, a Shi'ite, has ordered an inquiry into the involvement of police in the killings.
Vice President Tareq al-Hashemi, the most senior Sunni Arab politician, said militias acting under "official cover" in the reprisal killings should be treated as severely as insurgents.
A statement from his office said car bombs against "our Shi'ite brothers" must stop and condemned "the criminal behaviour by some policemen in randomly killing many civilians".
"It requires efforts from both sides to put an end to this bloodshed which aims to destroy all of Iraq. But this is not enough if the government does not move quickly to clear the security forces of militias," the statement said.
"Any delay in dealing with this issue will lead to more bloodshed," he said.
Militia infiltration of security forces has long been a problem in restoring stability to Iraq, with many Sunni Arabs complaining they are unfairly targeted by police and army.
Nineveh provincial governor Durad Kashmula told a news conference policemen were involved in the reprisal attacks.
"They have been arrested but released afterwards due to the demonstrations and to deter strife," he said, referring to protests in Tal Afar on Wednesday. But he said the culprits would be brought to justice in due course.
HUGE CRATER
A senior U.S. military officer said one of the Tal Afar truck bombs was thought to have used between 7,000 and 10,000 pounds (3.2 and 4.5 tonnes) of explosives, which he said would make it one of the largest bombs since the March 2003 invasion.
It left a huge crater and buildings reduced to rubble over a wide area with crumpled bodies, including several children, in the ruins. The attacker had lured victims to the scene by pretending to have flour to sell from the truck.
The top U.S. military commander in Iraq, General David Petraeus, said he saw the hand of al Qaeda in the truck bombs.
"They did succeed in Tal Afar in killing a number of innocent civilians in a predominantly Shi'ite market-place that touched off, and we are still trying to get the exact details, but it appears there were some kind of retribution killings by police," he told Reuters and another news agency.
He said interior and defence ministry officials had gone to the town to find out what had happened.
"It's obviously a horrific situation for a community that has generally stayed together pretty much," he said in Baghdad.
In March 2006, Bush called Tal Afar a "free city that gives reason for hope in a free Iraq".
Doctor Salih Qadu, head of Tal Afar hospital, said the final toll from the two bombs had risen to 85. He said 60 bodies of men shot in the aftermath had been brought to the hospital. A senior Iraqi army officer put the toll from those attacks at 70.
The new U.S. ambassador to Iraq, Ryan Crocker, was sworn in on Thursday and pledged to stand by Maliki's government but said the prime minister and parliament must push ahead with reconciliation.
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