Aussies to move in with Brits in Iraq

Australia's embassy in Baghdad will close its doors as staff move into a compound run by our British allies.

The decision to co-locate Australia's consular staff in Iraq to the British embassy was confirmed in Tuesday's federal budget.

The move, to take effect from 2015, is designed to save both nations cash on security and administration in the strife-torn Iraqi capital over the long term.

The government also expects to save nearly $80 million by not relocating its embassy in the Iranian capital Tehran.

The decision was made not to shift locations after a long period of delays and cost escalations.