Iraqi authorities say 20 militants were killed in Tuesday's fighting between Sunni militants and U.S. and Iraqi forces in Baghdad's Fadhil neighborhood.
Officials earlier reported a death toll of seven - four Iraqi soldiers and three militants.
The U.S. military said 16 American soldiers were lightly wounded in the day-long fighting and that most returned to duty Wednesday.
News reports describe the fighting as most intense since U.S. and Iraqi forces began a massive security operation in Baghdad in mid-February.
Separately, the military said coalition forces killed one terrorist and detained 13 suspects in the Arab Jabour region during a five-day operation, which ended Tuesday.
In Washington, President Bush invited congressional leaders for a meeting at the White House next week to discuss the controversy over the funding bills for the wars in Iraq and Afghanistan.
Mr. Bush said he is not willing to negotiate on the bills and again called for lawmakers to send him a war spending bill without restrictions such as a timetable for withdrawing U.S. forces from Iraq.
Democratic Senator Harry Reid said timetables hold the president accountable for a war that most Americans now believe was a mistake.
Some information for this report was provided by AFP and AP.