BAGHDAD, Iraq - A suicide attacker detonated a massive car bomb today at a checkpoint near the British Embassy and the interim Iraqi government's headquarters in Baghdad, killing 11 people and wounding 40, including a U.S. soldier, authorities said.

It was the worst attack in the capital since the United States transferred sovereignty to the interim Iraqi government on June 28.

Hours earlier, the Philippines said it had begun withdrawing its troops from Iraq, an apparent bid to placate militants who threatened to kill a Filipino hostage if the tiny contingent was not out by July 20.

Underscoring the urgency of the Philippines' predicament, militants in Iraq said they had killed a captive Bulgarian truck driver and threatened to put another Bulgarian hostage to death in 24 hours, Al-Jazeera television reported today.

The explosion shook buildings throughout central Baghdad about 9:15 a.m. when a suicide bomber detonated a car packed with 1,000 pounds of explosives. The bomb killed four Iraqi national guardsmen and seven Iraqi civilians, the U.S. military said. Many of the civilians were waiting in line to apply for jobs, presumably with the new Iraqi government or multinational forces.

"We were thrown on the ground. Then I saw many dead people on the ground," said one witness, Alla Hassan.

Black and gray smoke billowed from the site of the blast, which left a crater two-yards wide and one-yard deep in the road. The charred remains of five cars stood by a protective blast wall that had been partially destroyed. Two other trucks and a car lay smoldering nearby. Police cars and ambulances raced to the scene, and U.S. helicopters hovered overhead.

It targeted a checkpoint leading to a parking lot in the area formerly known as the "Green Zone," the heavily protected Baghdad neighborhood housing government offices and the U.S. and British embassies, Iraqi police Col. Tawfeeq Sayer said.

"This is a naked aggression against the Iraqi people. We will bring these criminals to justice," interim Prime Minister Iyad Allawi said as he visited the scene.

Allawi said the attack was retaliation for the government's arrest of suspected terrorists, though he offered no details on suspects. The government said Tuesday it had arrested more than 500 suspects in a police sweep of militants in Baghdad.

Kidnappers holding the Filipino, Angelo dela Cruz, said they would treat him like a prisoner of war if Manila made a good-faith move toward withdrawing its 51 troops early and would free him if the pullout was completed by July 20. The government statement today did not clarify when the pullout would be finished but appeared directed toward that demand.

The government was already set to withdraw its troops Aug. 20. A full withdrawal before then would be a major blow to the unity of U.S.-led coalition in Iraq.

Yet dela Cruz's family celebrated the announcement and a Philippine official in Baghdad said there was no longer any risk of him being executed.