A suicide car bombing has killed at least 20 people in Tuz Khurmatu, a town in Salaheddin province in northern Iraq, according to local security and medical sources.

Dozens more were wounded in Tuesday's attack near a marketplace in Tuz Khurmatu, south of Kirkuk and home to a mixed Arab, Kurdish and Turkmen population.

Located about 200km north of Baghdad, Tuz Khurmatu is one of the disputed areas between the Iraqi central government and the Kurdistan Regional Government.

It is one of several towns that witnessed deadly clashes last month when the Iraqi government deployed troops and paramilitary fighters in response to a referendum in which Kurds overwhelmingly voted for secession from Iraq.