Five countries whose citizens died when Iran shot down an airliner in error last week said Tehran should pay compensation to families of the victims, and warned that the world is watching for its response.

Canada, Ukraine, Sweden, Afghanistan and the United Kingdom said on Thursday that Iran should hold a "thorough, independent and transparent international investigation open to grieving nations" in a statement issued after a meeting of officials in London.

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The airliner was struck by a missile on January 8 shortly after it left Tehran en route to Kyiv.

Iran admitted on Saturday that it had shot down a Ukraine International Airlines plane mistakenly, after initially denying it had a role in the incident.

All 176 people aboard were killed, including 57 Canadians, 11 Ukrainians, 17 people from Sweden, four Afghans and four British citizens, as well as Iranians.

The five countries asked Iran to conduct the process of identifying victims with dignity and transparency while respecting the wishes of families regarding repatriation.

"The eyes of the international community are on Iran today. I think that Iran has a choice, and the world is watching," Canadian foreign minister Francois-Philippe Champagne told reporters.

The bodies of all the Ukrainians who died in the crash have been identified and will be transported back to Ukraine on January 19, the interior ministry said in a statement to Reuters.

Canada's Minister of Foreign Affairs Francois-Philippe Champagne (left) speaks during a news conference, standing next to (left to right) Afghanistan's acting Foreign Minister Idrees Zaman, British MP Andrew Murrison, Ukraine's Foreign Minister Vadym Prystaiko and Sweden's Foreign Minister Ann Linde after a meeting of the International Coordination and Response Group for the families of the victims of the flight that crashed in Iran, at the High Commission of Canada in London [Henry Nicholls/Reuters]

The countries said they welcomed Iran's engagement to date.

Most of those on Ukraine International Airlines flight 752 were Iranians or dual citizens, many of them students returning to their studies abroad or families on their way home after seeing relatives in Iran.

Many of the victims were academics, researchers and students linked to 19 Canadian universities.

The downing of the plane came amid heightened tensions between Iran and the United States over the January 3 killing of Islamic Revolutionary Guard Corps commander Qassem Soleimani in a US drone strike.

Iran fired missiles at Iraqi bases housing US troops in retaliation for the assassination of Soleimani, which US President Donald Trump had ordered.

US allies have avoided blaming Trump's administration, but Canadian Prime Minister Justin Trudeau said the crash victims would be alive today if tensions had not escalated in the region.

"If there was no escalation recently in the region, those Canadians would be right now home with their families. This is something that happens when you have conflict and the war. Innocents bear the brunt of it," Trudeau told Global News Television this week.