The announcement was made Thursday. Blackwater provides the majority of protection for U.S. government officials in Iraq, but has been criticized for "cowboy" tactics in the country, leading to what many have said are unprovoked, uncontrolled and uncalled-for killings of innocents.

The most visible example of such action was the September 2007 killing of 17 Iraqi civilians in Nisoor Square. On Jan 6th, five former Blackwater guards pleaded not guilty in Washington, D.C. federal court to manslaughter and gun charges in that incident.

Blackwater has been operating without an Iraqi government license. It had recently applied for one, but the request was turned down during the past few weeks by the Iraqi government, officials said.

"They presented their request, and we rejected it," said Ala’a Al-Taia, an official with Iraq’s Interior Ministry. "There are many marks against this company, specifically that they have a bad history and have been involved in the killing of so many civilians."

Iraqi officials said Blackwater must leave the country as soon as a joint Iraqi-U.S. committee finishes drawing up guidelines for private contractors under the new security agreement.

"When the work of this committee ends," Interior Ministry spokesman Maj. Gen. Abdul-Karim Khalaf said, private security companies "will be under the authority of the Iraqi government, and those companies that don't have licenses, such as Blackwater, should leave Iraq immediately."

The State Department issued a statement saying that Iraqi law will be obeyed, meaning Blackwater will be forced to leave. At the same time, a Blackwater spokesperson said they have not yet been informed of the decision directly.