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 It was the second perceived insult to Islam by American service members this month. A U.S. sniper was sent out of the country after using a Quran, Islam's holy book, for target practice.
Photographs of the coins, which were inscribed with phrases in Arabic, were widely distributed via cell phones in Fallujah and were seen by an Associated Press employee.
One side asked: "Where will you spend eternity?"
The other contained a verse from the New Testament: "For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life. John 3:16."
Such actions by American service members threaten to alienate Sunni Arabs who have become key allies in the fight against insurgents, a movement that started in Anbar province, which includes Fallujah.
Distribution of the coins in Fallujah was particularly sensitive because the city, 40 miles west of Baghdad, is known for its large number of mosques. It was the center of the Sunni-led insurgency before a massive U.S. offensive in November 2004.
Sheik Abdul-Rahman al-Zubaie, an influential tribal leader in the city, spoke of his outrage over perceived proselytizing by American forces and warned patience was running thin.
"This event did not happen by chance, but it was planned and done intentionally," al-Zubaie said. "The Sunni population cannot accept and endure such a thing. I might not be able to control people's reactions if such incidents keep happening."
Sunni officials and residents said a Marine distributed about 10 coins at a checkpoint controlling access to the city, the scene of one of the fiercest battles of the war.
Al-Zubaie said a man brought one of the coins to a mosque on Wednesday to show it to him and other Sunni leaders.
He accused the Marines of trying to do missionary work in Fallujah and said Sunni leaders had met with U.S. military officials and demanded "the harshest punishment" for those responsible to make sure it doesn't happen again.
Mohammed Hassan Abdullah said he witnessed the coins being handed out on Tuesday as he was waiting at the Halabsa checkpoint, although he didn't receive one himself.
The U.S. military -- still smarting from the Quran shooting -- said an American service member was removed from duty Friday "amid concerns from Fallujah's citizens regarding reports of inappropriate conduct."
A statement, which did not identify the service member or the branch of service, said the reports about the coin's distribution were being investigated. The U.S. promised "appropriate action" if the allegations are confirmed.
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 "Regulations prohibit members of the coalition force from proselytizing any religion, faith or practices," military spokesman Col. Bill Buckner said, stressing the troops are trained on the guidelines before being deployed.
Col. James L. Welsh, chief of staff for American forces in western Iraq, also said the matter has their "full attention."
Al-Zubaie said U.S. military officials met with tribal leaders on Thursday and expressed "astonishment about (the) behavior of this Marine, saying that they have already settled the matter of the violation of the Quran and suddenly a new problem has emerged."
Dr. Muhsin al-Jumaili, a professor of law and religious studies in Fallujah, said the act was especially provocative in Fallujah and risked alienating residents who recently have joined forces with the Americans against al-Qaida in Iraq.
"As Muslims, we cannot accept this," he told The Associated Press. "The Americans should concentrate on maintaining security and not doing missionary work."
"Such deeds will not make Muslims not trust American troops any more and might create a feeling of hatred among Muslims and Christians" at a time when they're finally living in peace, he added.
The revelation that an American sniper had used a Quran for target practice earlier this month prompted similar outrage and drew apologies from President Bush and senior U.S. commanders.
The alliances between Sunni tribes and U.S. forces have been key to a steep decline in violence over the past year. But tensions have risen over a series of incidents, including the accidental killings of U.S.-allied fighters, that have raised concerns about the fragility of the support for the American forces.
U.S. troops also have struggled to overcome the perception that they are insensitive to Islamic traditions after several missteps in the early stages of the war in Iraq.
[Associated
Press; By KIM GAMEL]
Associated Press staff in Fallujah contributed to this report.
Copyright 2008 The Associated
Press. All rights reserved. This material may not be published,
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