The insurgent group Al-Qaeda in Iraq has claimed responsibility for the attack in an Internet message.
Both bombers wore police uniforms. Guards at the ministry gate in Baghdad opened fire on one of them, but the bullets detonated the explosives strapped to his body.
As police crowded around his remains, a second suicide bomber approached and blew himself up, wreaking carnage.
The dead included a major who was responsible for ministry security.
A mortar shell was also fired but fell next door in the police academy but didn’t cause any damage.
Zarqawi blamed
The group headed by Iraq's most-wanted man, Abu Musab al-Zarqawi, said the attack was to avenge the "torture" of Sunni Muslims at the interior ministry.
"The lions of unification led a new raid against the ministry of interior... to avenge the Sunnis who were subjected to all sorts of torture at the prisons of this ministry," it said in a statement, which could not be independently authenticated.
Abuse scandals came to the fore in November and December when US and Iraqi forces discovered two overcrowded interior ministry detention centres. Some inmates had reportedly been tortured.
Sunni leaders have repeatedly alleged abuses at the hands of Shiite-dominated interior ministry forces.
The Organisation of Al-Qaeda in Mesopotamia said "the lions chose the day when the apostates were gathered to celebrate (Iraqi Police Day)."
"Two brothers ... managed to cross nine checkpoints and blew up their explosive belts," it said.
Top officials, including Interior Minister Bayan Jabr Solah, Defence
Minister Saadun al-Dulaimi and US ambassador Zalmay Khalilzad, were watching the annual police celebration when the attack occurred 200 yards away.
The latest bloodshed came as the electoral commission announced a delay in releasing its findings into fraud allegations in last month's Iraqi elections.
"There are still four to five small outstanding items," said Abdul Hussein al-Hindawi, a member of the Iraqi electoral commission board.
The commission said the findings would be announced next weekend, after the three-day Muslim Eid al-Adha holiday.
"The commission will also announce preliminary results in the days after Eid," the commission said, referring to the landmark vote.
The delay will also give extra time to a group of foreign monitors to wind up a separate probe into the December 15 poll -- the first to elect a permanent parliament in Iraq since the fall of Saddam Hussein in April 2003.
Shiites losing patience
The developments came as a senior Shiite leader accused US officials of trying to frustrate Iraqi security forces in their fight against insurgents who frequently target the country's majority Shiite community.
Abdel Aziz al-Hakim, head of the leading Supreme Council of the Islamic Resistance in Iraq (SCIRI), warned in an interview on CNN television that Shiites were losing patience and might take the law into their own hands.
The US ambassador, for his part, renewed earlier warnings that security institutions should be reformed and militias disbanded.
"They are a threat to Iraqi security and could produce future civil conflict and warlordism," he said in a column published in the Wall Street Journal.
Mr Khalilzad also urged Iraqis to form as broad-based a government as possible to undermine the insurgents.
Top Sunni leader Saleh Mutlaq Monday called for an end to violence, but also cautioned that "terrorism will only stop when we form a balanced, united Iraqi government in which everybody takes part".
Talks to form government
Meanwhile talks are underway to form a government that bridges Iraq's sectarian divide, with the United States and Britain reaching out to the minority Sunni Arabs who have helped fuel the insurgency.
Washington and London are keen to see the country's majority Shiites and the Kurds unite with the once-dominant Sunnis -- who cried foul after December's elections -- in the first full-term cabinet since the fall of Saddam Hussein.
Such an inclusive administration would, they believe, help quash the violence that has fermented sectarian tensions in Iraq. This would in turn speed up the withdrawal of US-led military forces from the country.
The US ambassador said Washington had been working hard to bring the Sunnis onboard.
"The US has reached out extensively to leaders of the Sunni Arab community to persuade them to join negotiations as constructive players and to embrace the pursuit of their aspirations through political means," Mr Khalilzad said in a column published by the Wall Street Journal.
He emphasised that violence will only make Iraq weaker rather than help a particular group gain power.
"However, if Sunni Arabs choose to invest in the political process, they will share the opportunity to shape the future of Iraq, participate in Iraq's future prosperity, and benefit from Iraq's progress," the ambassador said.
Mr Khalilzad urged senior members of the Sunni Arab community to call on the militants to lay down their arms.
A US official, speaking on condition of anonymity, emphasised that
Washington was not interested in talking to the most violent insurgent groups.
But extremists aside, "if there are ways to convince these other elements to lay down their weapons, abide by the rule of law in the new Iraqi state, that is a step forward," the official added.
Australian troops stay
At the same time Australia’s Foreign Minister Alexander Downer has rejected an immediate withdrawal of troops from Iraq, telling US Secretary of State Condoleezza Rice in Washington that Australian forces would leave only when Iraqis can defend themselves.
Mr Downer said he made it clear to Ms Rice that Australia supported a pullout "only at a time when the Iraqi security forces are able to maintain control over the security situation."
Mr Downer bristled when asked about comments made to The
Australian newspaper by Opposition Leader Kim Beazley, calling for Prime Minister John Howard to seriously consider withdrawing
Australian troops from Iraq.
"If you want the terrorists to take over Iraq, then the quickest way to do that is to walk out of Iraq," Mr Downer told reporters after the private meeting with Ms Rice.
"That would be a catastrophe for the Iraqi people, who have recently voted in the millions for a new government."
A recent poll showed declining support among Australians for the war in Iraq, with two-thirds saying the war wasn't worthwhile.
However, Mr Downer downplayed the poll, saying: "I don't think
Australians support us just abandoning the people of Iraq so soon after an election and allowing the country to be taken over by terrorists and insurgents."
Still, he said Australia "would like to get out of Iraq as soon as it is responsible to do so, and we will".