AFP: Blackwater security company back on the streets of Baghdad

"We have resumed limited movement today. It is very limited and all missions need to be pre-approved," she said.

"The decision was taken by us in consultation with the Iraqi government. All convoys will be protected by PSDs (private security details). Yes, it is Blackwater."

The US embassy ordered all staff confined to the highly protected Green Zone in Baghdad on Tuesday following Sunday's shooting into a crowded square by Blackwater guards while escorting a US civilian convoy through the capital.

Iraqis say that civilians were killed, while Blackwater insists the convoy it was guarding came under attack by insurgents.

Iraqi Prime Minister Nuri al-Maliki demanded that Blackwater be replaced for the security duties. The firm provides guards for US officials and civilian employees in the war-torn country.