University of Baghdad Professor Kays Juma, 72, was killed by security guards who opened fire when the professor's vehicle got too close to a convoy of 4WDs ferrying private contractors.
The Department of Foreign Affairs (DFAT) confirmed only that an Iraqi man with Australian residency had been shot and killed on Saturday after an incident at a checkpoint in Baghdad. His identity was not revealed.
"The Australian embassy in Baghdad is seeking advice on who is responsible for conducting an investigation into the incident and will register our strong interest with the relevant authorities to ensure the matter is investigated appropriately and promptly," a DFAT spokesman said.
The spokesman said initial speculation that the security guard who fired the fatal shots was Australian were incorrect.
"The manager of the security firm involved has reported that the employee responsible for shooting the man is not an Australian," he said.
DFAT said Professor Juma lived for the greater part of each year in Iraq with his wife, an Australian from Adelaide.
"The Australian embassy in Baghdad is providing consular assistance tot he man's wife and consular officers in Canberra are in contact with the woman's family in Australia," the spokesman said.
"This incident underlines that the security situation in Baghdad remains extremely dangerous."
Foreign Affair Minister Alexander Downer said the incident highlighted the extremely dangerous security situation in Iraq and he reiterated the foreign ministry's advice that Australians stay out of the war-torn country.
"He was allegedly in a vehicle that did not stop at a checkpoint on Saturday and the person at the checkpoint opened fire on him and he was killed," Mr Downer told ABC radio.
"We understand he was shot by a security officer and we're obviously doing our best to investigate that. We are not absolutely sure at this stage who shot him ... but it was somebody working for a private security firm."
Mr Downer said the facts of the incident were still under investigation and it was not certain which authority would carry out an investigation. The embassy in Baghdad is working on that, that is not terribly clear.
"But first and foremost it would be the responsibility of the police. We will have to wait and see and we are still encouraging coordination and an appropriate investigation at this stage."
Mr Downer said Australia wanted the investigation underway quickly but it would not necessarily include Australian authorities. The effectiveness of security in Iraq provided by private contractors was mixed, he said.
"They seem to be quite professional but having said that I am sure they are nothing like as disciplined and as organised as military people so you are likely to get mixed results," he added.
"But I don't have a lot of experience of their being bad incidents involving private security people but obviously there are risks involved."