Scores of American officials fled the hotel in pajamas and shorts after the 6:10am assault, which apparently used a makeshift rocket battery on a timer that had been wheeled into a nearby park. More than a half-dozen holes pockmarked the hotel's concrete facade and windows were shattered in two dozen rooms.

Wolfowitz, who appeared shaken as he addressed reporters at a convention centre across the street where most officials fled, vowed the attack would not deter the United States in its mission to transform Iraq.

"There are a few who refuse to accept the reality of a new and free Iraq," he said. "We will be unrelenting in our pursuit of them."

The bold strike from nearly point-blank range once again pointed up the vulnerability of even heavily guarded US facilities in Iraq, where American forces sustain an average of 26 lower-profile attacks daily. Wolfowitz was wrapping up a tour to assess ways to defeat a stubborn six-month-old insurgency.

The slain American was a colonel, Wolfowitz said, without identifying him. That would be one of the highest ranking US military officers killed in the Iraqi insurgency. Since President Bush declared an end to major combat in Iraq on May 1, 109 US soldiers have been killed by hostile fire.

The 15 people wounded included seven American civilians, four US military personnel and four "non-US coalition civilian partners," according to a statement by the US command. One Briton was among the wounded.

The Al Rasheed, which houses civilian occupation officials and US military forces, is the downtown Baghdad district at the heart of the US-led adminstration of Iraq, about a mile from the palace housing the coalition headquarters and the offices of interim Iraqi Governing Council. Wolfowitz, one of the architects of the war that ousted Saddam Hussein was in the Al Rasheed at the time of the attack, Maj. Paul Swiergosz said at the Pentagon.

The attackers had boldly driven to the edge of a park just 500 yards southwest of the hotel, towing what looked like a portable, two-wheeled generator, Iraqi police said. They quickly fled, and rockets suddenly ignited within the trailer, apparently on a timer, flashing toward the nearby hotel. Their impact resounded across central Baghdad. The heaviest damage was on what appeared to be the fifth and eighth floors of the modern, 18-storey building.

Three approaching security guards were injured by the ignition blast, police said.

Wolfowitz, expressing "profound sympathy" for the victims, said danger persists in Iraq "as long as there are criminals out there staging hit-and-run attacks."

The top US administrator in Iraq, Paul Bremer, said he didn't know whether Wolfowitz was the intended target of the attack.

"We certainly had a bad day," Bremer told ABC's "This Week." "Freedom still has its enemies in Iraq, and we've got to expect that we're gonna have to defeat these terrorists and these Baathists before we get to a more secure situation."

Just a day earlier, and only hours after the deputy secretary left the 4th Infantry Division base at Tikrit, north of Baghdad, a division helicopter crash-landed after insurgents fired a rocket-propelled grenade near the base. The Black Hawk pilot managed to maintain control after the hit and crash-landed, said division spokeswoman Maj. Jossyln Aberle. One crewmember was injured, she said.

The hotel attack came two hours after coalition authorities ended the night-time curfew in the Iraqi capital in preparation for the Muslim holy month Ramadan, which begins here Monday. Officials cited improved security as the reason for ending the curfew.

An Iraqi police commander, who refused to give his name, said the attackers, in a white Chevrolet pickup, had driven down a main road passing a few hundred yards from the hotel and stopped at the edge of the city's main Zawra Park and Zoo. Security guards of the new Facilities Protection Service spotted the activity.