Thousands of regime backers massed at a mosque in the Syrian capital today for funeral prayers for policemen killed in a Damascus bombing, as the government vowed to respond with an "iron fist" to security threats.

Coffins bearing 11 policemen, covered with Syrian flags, were taken into the Al-Hassan mosque for the prayers, a day after the explosion ripped through a Damascus intersection, killing 26 people and wounding 63. Officials said the attack was a suicide bombing, the second in two weeks to hit the normally quiet Syrian capital.

The regime of President Bashar Assad has touted the attacks as proof that it is being targeted by "terrorists". But the country's opposition demanded an independent investigation, accusing forces loyal to the Syrian regime of being behind the bombing to tarnish a 10-month-old uprising against Assad.

The bombings have coincided with a mission by Arab League observers investigating Syria's crackdown on the protest.

In the hours after the bombing, Syrian troops opened fire on demonstrators holding anti-Assad sit-ins in two parts of the country, killing one and wounding at least 20, activists said.

Friday's blast took place in Damascus' Midan neighbourhood, one of the few parts of the heavily controlled capital that have seen protests against the regime. The Al-Hassan mosque, where today's prayers took place, has been a launching point for protests to start their marches following weekly prayers.

But today, it was swamped by Assad supporters.

Thousands of mourners outside the mosque chanted, "Freedom became terrorism. We are not scared of America, the mother of terrorism." Others chanted, "the people want state of emergency," referring to the decades-old emergency laws that Assad lifted in April as part of reforms he promised.

A group of women wore black shirts emblazoned with Assad's picture, labelled "the Shield of Syria."

Information Minister Adnan Mahmoud told reporters outside the mosque that the explosion "is part of the scheme based on terrorism and killing that has been targeting Syria since nine months".

Dahida Abdul-Rahman, 50-year-old housewife at the prayers, said the Arab observers should be thrown out of the country. "Since they came, terrorist attacks started," she said.