A car bombing has killed 12 people and wounded dozens more at an outdoor market in a district north of Iraq's capital, Baghdad, according to police sources.

Police said a parked car packed with explosives blew up on Tuesday morning at a vegetable and fruit market in Rashidiyah town.

No group has claimed responsibility for the attack, which wounded at least 37 people.

Speaking to Associated Press on the condition of anonymity, a medical official confirmed the casualty figures.

Baghdad is on high alert for attacks after a blast in the central Karada district on July 3 killed more than 300 people.

This was the deadliest bombing in Iraq since US-led forces toppled Saddam Hussein 13 years ago.

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The Islamic State of Iraq and the Levant group (ISIL, also known as ISIS), which holds territory in Iraq, claimed responsibility for that attack.

The bombing in Rashidiyah came as the Iraqi parliament was due on Tuesday to discuss security measures in the capital in the wake of the attack in Karada.

On Monday, visiting US Defense Secretary Ash Carter said Washington will send 560 more troops to Iraq to help battle ISIL.

On Friday, Iraqi Prime Minister Haider al-Abadi accepted the resignation of interior minister Mohammed al-Ghabban and sacked the city's head of security operations and other senior officials, following the deadly attack in Karada.