"We have sent an order to 250 former Blackwater employees, who today are working with other security companies in Iraq, to leave the country in seven days and we have confiscated their residence permits," said Jawad Bolani.

"All of those concerned were notified four days ago and so they have three days to leave. This decision was made in connection with the crime that took place at Nisur Square."

Bolani was referring to an incident at the busy Baghdad square in September 2007, when five guards employed by Blackwater were accused of killing 14 unarmed Iraqis in a gun and grenade attack, and wounding 18 others.

The case has become a running sore among the Iraqi population and uproar was sparked last year when a US judge dismissed charges against the guards, ruling that US prosecutors violated their rights by using incriminating statements they had made under immunity during a State Department probe.

US Vice President Joe Biden, during a trip to Baghdad last month, expressed his "personal regret" at the incident and said the American government would appeal the case.

The Baghdad government maintains that 17 people were killed by the guards, who were part of a convoy of armoured vehicles.

Blackwater Worldwide changed its name to Xe Services in February 2009, following what the company said was a switch of business focus.

However, critics suggested that the rebranding was an effort to polish an image tarnished by an alleged culture of lawlessness and lack of accountability among Blackwater staff.

In December, the New York Times reported that Blackwater took part in Central Intelligence Agency "snatch and grab" missions to capture or kill insurgents in Iraq and Afghanistan.

The North Carolina-based firm lost its contract to provide security for US embassy diplomats in Baghdad in May 2009 after Iraqis and critics repeatedly accused it of adopting a cowboy mentality to duties in the country.

Only days earlier the Iraqi government said it was considering lodging its own complaint against Blackwater to seek compensation for the families of the victims.

The admissibility of such a case, however, was doubted because all of the families except one had previously agreed damages from Xe, according to a lawyer injured in the incident.

The lawyer, Hassan Jabbar Salman, said the families of those killed were offered 100,000 dollars (73,000 euros) and those wounded received between 20,000 and 50,000 dollars from the US security firm.

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