I'm not a fan of "across the board" low carb diets, because not all carbs are created equal. By the same token, I don't advocate cutting out any one food group, such as the bread.
I would suggest switching to whole grain breads and limit the amount (not eliminate it completely), implement lots of veggies into your diet (complex/good carbs and fiber). Agree that lots of protein will help keep you from losing muscle, but won't prevent it completely. You also need to implement a moderate exercise program as well, as this will help keep your muscles strong and flexible, plus it will help keep your heart in good condition.
Eliminate refined sugar, flour, white rice, etc as these are the simple carbs that get so many of us into trouble.
Eat a low carb high protein diet and exercise with both cardio and resistance training; resistance training is essential. A low carb diet like Atkins is one great way to reduce body fat, and because of the high protein, you wont lose muscle. However you can use any other type of high protein diet plan, as long as you keep total calories in control.