Iran has been secretly stockpiling short-range ballistic missiles in Iraq amid fears they could be fired at US troops by Tehran-backed militias, American officials say.

The Iranian regime has exploited the unrest in Iraq, which has seen hundreds of protesters shot dead and Prime Minister Adel Abdul Mahdi resign, to get the missiles into the country, US intelligence believes.

Officials added that Iran-backed militias have stepped up attacks against US positions in recent weeks with larger rockets than had been previously seen.

Iran has exploited a month of bloody protests in Iraq to smuggle short-range ballistic missiles into the country, US officials believe (file image)

The missiles could be used against US troops in the region, and to threaten American allies Saudi Arabia and Israel (pictured, protesters in Baghdad)

The missiles also pose a threat to US allies in the region including Saudi Arabia and Israel, officials told the New York Times.

It comes as the Pentagon was forced to deny a report that the US was thinking about sending up to 14,000 more troops to the Middle East to counter a perceived threat from Iran.

The Wall Street Journal reported that the possible deployment would include 'dozens' more ships, citing unnamed US officials.

The paper said President Donald Trump could make a decision on the troop boost as early as this month.

But the Pentagon disputed the accuracy of the report.

'To be clear, the reporting is wrong. The U.S. is not considering sending 14,000 additional troops to the Middle East,' spokeswoman Alyssa Farah tweeted.

The region has seen a series of attacks on shipping vessels and a drone and missile attack on Saudi oil installations in September blamed on Iran.

Washington has already ratcheted up its military presence in the Gulf and expanded economic sanctions on Tehran, elevating tensions across the region.

In mid-November the US aircraft carrier Abraham Lincoln sailed through the Strait of Hormuz in a show of force aimed at reassuring allies worried about the Iran threat.

In October Defense Secretary Mark Esper announced that two fighter squadrons and additional missile defense batteries were being sent to Saudi Arabia, for a total of about 3,000 new troops.

Dozens have been shot dead and hundreds more wounded in a month of protests that has seen Prime Minister Abdel Abdul Mahdi resign

News of the stockpile comes after the Pentagon denied reports that the US was considering sending another 14,000 troops to the Middle East to counter Iranian threats

Earlier Wednesday Iranian President Hassan Rouhani said the country was willing to return to the negotiating table over its nuclear program if the United States first drops sanctions, which have hampered the country's economy and may have contributed to recent domestic turmoil sparked by fuel price hikes.

Speaking at a defense conference in Manama, Bahrain on November 23, General Kenneth McKenzie, commander of US Central Command, said the US does not have all the resources it needs to cover the Middle East region.

'There is a lot of water to cover. Simply put, we don't have sufficient resources to be where we want to be in the right numbers all the time,' he told the annual Manama Dialogue on regional security.

But McKenzie rebuffed criticism that Washington has been disengaging from the region.

'We have a carrier in the theatre, we've reinforced Saudi Arabia,' he said.

'So I'm not sure I would agree with the narrative of abandonment or a narrative of walking away.'

'Clearly the United States has different global priorities and this is probably not the highest global priority, but I think it remains a very important thing for the United States,' he added.