Private Jake Kovco, a highly trained sniper, died from an accidental shot to the head last Friday while cleaning his pistol. He is the first Australian soldier to die in Iraq.
The 25-year-old was a member of the 110-strong Baghdad-based security detachment protecting Australian officials.
Private Kovco will be honoured in an ANZAC Day ceremony in Victoria on Tuesday at his hometown of Briagolong, in Gippsland.
Private Kovco's body is en route to Australia after being draped in the national flag in an emotional farewell by his comrades at a Baghdad hospital on Sunday.
Across Iraq violence has killed another 14 people including seven people in a rocket attack on the country's defence ministry and three US soldiers in a roadside bombing.
Seven Iraqis were killed when insurgents fired two Katyusha rockets into Iraq's defence ministry parking lot.
The explosions, which also wounded eight people, shook the sprawling Green Zone enclave, a fortified US and Iraqi site that is home to the US embassy and the Iraqi parliament.
The US military said three of its soldiers died when their vehicle was struck by a roadside bomb northwest of Baghdad at 11:30 am (0730 GMT) Sunday, but did not give further details.
Reaction to new PM
On the political front President George W Bush has told Iraq's new leaders that they have a responsibility to unite the country and that the new government is an important milestone for the United States.
Mr Bush said during a visit to a US Marine base that he spoke to Iraq’s Prime Minister designate Jawad al-Maliki, President Jalal Talabani and the new parliament speaker Mahmud Mashhadani by telephone.
"I told them they have awesome responsibilities to their people," Mr Bush said.
"They have the responsibility of improving the lives of men and women regardless of their beliefs. They have a responsibility to defeat the terrorists. They have a responsibility to unite their country and I believe they will," he said.
The formation of the new government is "an important milestone toward our victory in Iraq", said Mr Bush.
Mr Maliki has a month to form a cabinet sharing power among Shi'ites, Sunni Arabs and Kurds, and his choices for key posts, such as interior minister, are seen as critical to uniting Iraqis, winning their trust and ending sectarian bloodshed.
But on the streets, Iraqis say choosing a prime minister and government is just the first step on a long road to peace and the reaction to the elevation of Mr Maliki, a Shi'ite, appeared often split along sectarian lines.
"Overcoming this impasse of forming the government doesn't mean solving all the political crises in Iraq," said Saleem al-Jubouri, a professor at Baquba's Diyala University.
"Maliki has tough issues to deal with, occupation, regional intervention, armed militias and illegal detention centres."
Washington's ambassador to Iraq, Zalmay Khalilzad, says the breakthrough will lead over time to an improvement in Iraq's ability to ensure its own security, allowing a reduction in US troop numbers, now about 130,000.
But in the Kurdish north, 25-year-old Samir Abdall's response was typical: "I don't know Jawad al-Maliki. Time will prove who he is, whether he is efficient or not. All politicians when they occupy government posts say a lot, but achieve nothing."
National unity
The formation of a government of national unity bringing together the main religious and ethic groups is widely seen as essential for heading off a civil war after spiralling sectarian violence since a Shi'ite shrine was bombed in February.
A proven behind-the-scenes player who has helped shape post-war politics, Mr Malaki must also rescue the oil-rich economy, which has been starved of foreign investment by the unrest.
A particular test will be his choice of interior minister, after Sunni leaders accused the Shi'ite-run ministry of condoning death squads targeting Sunnis, a charge it denies.
Another will be the choice of oil minister, who will play a key role in sharing out the benefits of the massive reserves.
The leading Shi'ite Alliance chose Mr Maliki, an official in the oldest Islamist party al Dawa, after its original choice, interim Prime Minister Ibrahim al-Jaafari, bowed out under pressure from Sunni and Kurdish parties.