Iraq is investigating the discovery of more than 170 prisoners in a government bunker in Baghdad where many were found starved, beaten and tortured.

Iraqi officials made the announcement Tuesday, two days after U.S. troops surrounded the Interior Ministry compound where the detainees were being held in an underground cell.

Neither the U.S. military nor the Iraqi government would comment on whether the American forces found the cell.

Iraqi Prime Minister Ibrahim al-Jaafari talks to journalists during a press conference in Baghdad. (AP photo)

"I was informed that there were 173 detainees held at an Interior Ministry prison and they appear to be malnourished," Prime Minister Ibrahim al-Jaafari told reporters on Tuesday.

"There is also some talk that they were subjected to some kind of torture."

The prime minister said all the detainees had been moved to a different detention centre and were receiving medical care.

The U.S. military isn't saying anything about the case, referring all questions to the Interior Ministry.

Al-Jaafari said he ordered a high-level investigation into allegations that ministry officials tortured and abused the prisoners, who were suspected of being insurgents.

'Some had their skin peeled off'

The deputy interior minister was more explicit, saying he was stunned by the prisoners' treatment.

"I've never seen such a situation like this during the past two years in Baghdad; this is the worst," Hussein Kamal told CNN.

"I saw signs of physical abuse by brutal beating, one or two detainees were paralysed and some had their skin peeled off various parts of their bodies."

Kamal told Reuters news agency that the treatment was "totally unacceptable."

"It is denounced by the minister and everyone in Iraq."

Government repeatedly told about abuse, critics

A leading Sunni politician and Amnesty International questioned the Shia-led government's claims that it was unaware of the alleged abuse.

The head of the country's biggest Sunni political party, Mohsen Abdul-Hamid, told the Associated Press that people had repeatedly complained about abuse and torture at ministry detention centres, including the one in the scandal.

Mohsen Abdul-Hamid, head of the Iraqi Islamic party, said he had spoken to al-Jaafari and other government officials about the allegations.

He said he was brushed off and told the prisoners – all Sunni Muslims – were part of the regime of former Iraqi president Saddam Hussein.

Most insurgents in the country are Sunni Muslims, who were dominant under Hussein even though they form the minority in Iraq.

Amnesty International said there have been many reports that Iraqi detainees were being abused and tortured by police and Interior Ministry security forces.

An Amnesty spokeswoman urged al-Jaafari to expand his investigation to include all allegations of abuse at detention centres.