KIRKUK, Iraq (Reuters) -- A Kurdish policeman killed his wife and three children while they slept and tried to blame it on insurgents in the volatile northern Iraqi city of Kirkuk, Iraqi police said on Thursday.

The attack took place on Sunday in a Kurdish neighbourhood of disputed Kirkuk, 250 km (155 miles) north of Baghdad, where al Qaeda and other insurgents are exploiting tensions between Arabs and Kurds in an attempt to stoke ethnic conflict.

Earlier reports said gunmen stormed the man's house and shot dead his family while he was on night duty.

Police said after investigation they suspected the policeman had returned home during his shift and murdered his family, including children aged one and three. Police said the man was in debt and wanted to sell the house but his wife had refused.

Police Brigadier-General Sarhat Qader said the man had confessed to his crime after being questioned.

Confessions in Iraq are seen as unreliable as police routinely extract them with torture. It was not possible to confirm the conditions under which the man confessed.

Reporting by Mustafa Mahmoud; Writing by Aseel Kami; Editing by Tim Cocks.