BAGHDAD - US security firm Blackwater ended its operations in Iraq on Thursday closing a controversial era for the company whose guards shot dead 17 civilians in Baghdad in 2007.

"The task order for security protection operations held by Blackwater comes to an end today in Baghdad," American embassy spokeswoman Susan Ziadeh said, adding that Triple Canopy will replace it.

Triple Canopy, a Virginia-based firm, was appointed at the end of March by the US State Deparment to take over the multi-million-dollar contract to protect US government personnel working in Iraq.

Linked agreements such as that for Presidential Airways, part of Blackwater that operates helicopter escorts throughout the country for secure air travel, will expire soon, Ziadeh added.

The State Department refused to renew annual contracts for Blackwater which renamed itself Xe after the Iraq government banned it in January over the killings in Baghdad's Nisur Square on September 16, 2007.

An Iraqi investigation found that 17 civilians died and 20 were wounded when Blackwater guards opened fire with automatic weapons while escorting an American diplomatic convoy through the square.

US prosecutors say 14 civilians were killed in the incident. Five former Blackwater guards pleaded not guilty at a federal court in Washington in January to manslaughter charges.

The shooting focused a spotlight on the shadowy and highly lucrative operations of private security operations. Blackwater guards were reported to earn as much as 1,000 dollars a day each in Iraq.

Anne Tyrrell, a spokeswoman for Xe, said the firm remains proud of its work in Iraq.

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"When the US Government initially asked for our help to assist with an immediate need to protect Americans in Iraq, we answered that call and performed well," she said in comments emailed to AFP.

"We are honored to have provided this service for five years and are proud of our success - no one under our protection has been killed or even seriously injured."

"We always knew that, at some point, that work would come to a close."

Foreign security teams in Iraq have long operated in a legal grey area, but under a military accord signed with Washington last November, Iraq won a concession to lift the immunity to prosecution previously extended to US security contractors.

Blackwater first came under scrutiny on March 31, 2004, when four of its employees were killed by an angry mob in Fallujah, then a Sunni Arab insurgent stronghold.

The crowd mutilated their bodies and strung them from a bridge, shocking images that were broadcast worldwide and led to a month-long assault on Fallujah that left 36 US soldiers, 200 insurgents and 600 civilians dead.

North Carolina-based Blackwater has been protecting US government personnel in Iraq since the 2003 invasion and has had around 1,000 staff in the violence-wracked country, making it among the largest security firms operating there.

In the wake of the scandal over civilian deaths in Iraq, its founder Erik Prince announced in March that he was stepping down as chief executive, but would stay on as chairman.