Baghdad: Iraq will not take immediate steps to expel US security firm Blackwater, under investigation over a shooting which killed 11 Iraqis a week ago, a government security official said yesterday.

Prime Minister Nouri Al Maliki had vowed to freeze the work of Blackwater, which employs about 1,000 people guarding the US embassy in Baghdad, after the shooting in western Baghdad last Sunday but it was back at work five days later.

The Iraqi government and US officials have agreed to set up a joint inquiry into the work of private security companies like US-based Blackwater, which many Iraqis see as private armies acting with impunity.

Softening stance

In what appeared to be a further softening of Iraq's response to the shooting, a government spokesman for Baghdad security said Blackwater and other private security companies were doing important work guarding foreign diplomats.

"If we drive out or expel this company immediately there will be a security vacuum that will demand pulling some troops that work in the field so that we can protect these institutes," spokesman Tahseen Al Sheikhly, speaking through an interpreter, told a news conference.

"This will create a security imbalance," he said.

Al Maliki's government has called the shooting a "flagrant assault" and a crime that angered the Iraqi people. Suggesting the US embassy stop using Blackwater, Al Maliki said on Wednesday he would not allow Iraqis to be killed in cold blood.

Blackwater, one of the biggest private security contractors in Iraq, has said its guards reacted "lawfully and appropriately" to an attack against a convoy it was guarding.

Its guards were back on Baghdad streets on Friday, after the US embassy eased a three-day ban on road travel by US officials outside the heavily fortified Green Zone.

A senior Iraqi police source close to the investigation denied reports that the joint inquiry was examining video taken from the scene which showed that Blackwater guards had opened fire without any apparent provocation.

Iraq has said it would review the status of all private security firms, which employ between 25,000 and 48,000 guards.