The bomber detonated a vest laden with explosives at about 2.45pm in the Ibn Zanbour restaurant, which is just 400 yards from the main gate of the heavily fortified Green Zone and is especially popular with Iraqi police and soldiers.
Seven policemen were among those killed, while the injured included 16 officers, Iraqi army major Falah Al-Mehmadawi said.
Elsewhere, militants staged a series of attacks that killed at least nine other people, despite two joint US-Iraqi offensives - Operations Spear and Dagger - that began earlier this week with about 1,000 US forces and Iraqi soldiers each.
Nearly 60 insurgents have been killed and 100 captured so far in the campaigns, which are aimed at destroying militant networks near the Syrian border and north of Baghdad, the military said.
One US Marine was killed yesterday in Operation Spear and three Americans have been reported wounded.
Troops participating in Operation Spear - in its third day in the Anbar province town of Karabilah fired Hellfire missiles overnight at two homes where insurgents holed up after shooting mortars at coalition forces, said Lieutenant Colonel Tim Mundy, who commands the 3rd Battalion, 2nd Marine Regiment. The military said they believed four or five militants may have been killed in the counterattack.
A main battle tank killed a suspected suicide truck bomber, Marine captain Jeffrey Pool said from Ramadi, the provincial capital. The vehicle exploded and the tank crew observed secondary blasts from explosives rigged to it.
US and Iraqi forces have been shouting through loudspeakers to residents of the western town to leave their homes with white flags and head to a safer area. But they have found that most of the town’s homes are already empty.
Dozens of buildings in Karabilah, 200 miles west of Baghdad, were destroyed after airstrikes and tank shelling, according to an Associated Press reporter at the scene.
Intelligence officials believe Anbar province is a portal used by extremist groups, including Abu Musab al-Zarqawi’s al-Qaida in Iraq terrorist group, to smuggle in foreign fighters. Syria is under intense pressure from Washington and Baghdad to tighten control of its porous 380-mile border with Iraq.
Yesterday, troops searching the town found four Iraqi hostages beaten, handcuffed and chained to a wall in a torture centre, the military said. Some of the men were believed to be Iraqi border guards and they were held captive for three weeks.
The basement of the building where the men were found contained a weapons cache with automatic rifles, ammunition, terrorist training manuals and DVDs with insurgents beheading captives, Capt Pool said. A schoolhouse on the same compound had a chalkboard with instructions on how to make roadside bombs, he said.
US and Iraqi forces also found a bomb-making factory with blasting caps, cell phones and other materials to make roadside and car bombs. They uncovered sniper rifles, ammunition and a mortar system.
A second offensive of similar size, Operation Dagger, was launched on Saturday, targeting the marshy shores of a lake north of Baghdad. Dagger seeks to eliminate insurgent training camps and weapons caches in the Lake Tharthar area, 50 miles north-west of Baghdad.