At least 75 protesters were wounded, mainly by live bullets, in clashes in Nassiriya overnight when security forces attempted to move them away from bridges in the city, police and health source said.
On Monday morning, clashes resumed in central Baghdad as police fired tear gas at demonstrators, Reuters reporters said.
Security officials said the two protesters in Nassiriya were killed late on Sunday by unknown gunmen in four pickup trucks who attacked the main protest camp and set fire to demonstrators' tents before fleeing the scene.
Anti-government protests erupted in Baghdad on Oct. 1 and quickly turned violent. Security forces and unidentified gunmen have shot protesters dead. Nearly 500 people have been killed in the unrest.
After a lull in unrest earlier this month, demonstrations resumed in Baghdad and southern cities and protesters have controlled three key bridges in Baghdad and maintain camps and road blocks in several cities in the south.
The protests are an unprecedented leaderless challenge to Iraq's Shi'ite Muslim-dominated elite, which emerged after a U.S.-led invasion toppled Sunni dictator Saddam Hussein in 2003.
Demonstrators are demanding that all parties and politicians be removed, free and fair elections be held and corruption rooted out. The government has responded with violence and piecemeal reform. The international community has condemned the violence but not intervened to stop it.
Operations by security forces to remove the protest camps started after populist cleric Moqtada al-Sadr said on Saturday he would halt the involvement of his supporters.
Sadr had backed the demands of protesters for the removal of corrupt politicians and for the provision of services and jobs soon after the demonstrations began in October, but stopped short of calling all his followers to join in.
Demonstrations continued in Baghdad where security forces used tear gas against protesters in central Baghdad. Protests also continued in many southern cities on Monday, resisting repeated attempts by security forces to end their protests.
Protesters in Nassiriya broke into a police office on Monday and set fire to at least five police vehicles parked inside before they left the location, police and Reuters witness said.
Nassiriya protesters also started building more permanent structures using bricks to replace sit-in tents burned during the attack by the unknown armed group, Reuters witnesses said.
Five Katyusha rockets hit Baghdad's Green Zone, which houses government buildings and foreign embassies, late on Sunday, without reporting casualties, a military statement said.Security sources told Reuters that at least one rocket landed inside the U.S. embassy compound and wounded three people.