Navy captain Manuel Martin Oar was one of at least 24 people killed in Tuesday's attack against the United Nations headquarters in Baghdad, which has been condemned around the world.
Spanish Prime Minister Jose Maria Aznar, a staunch US and British ally in the war on Iraq, has pledged a 1,300-strong troop contingent for the reconstruction effort despite growing public concern.
Spain already has 744 soldiers there, but the death of one of their own number has shocked the population and opposition parties demanded a parliamentary debate in the belief that Spanish forces should be brought home.
Oar was working for Spanish special ambassador to Iraq, Miguel Benzo Perea, who was not in the office at the time of the explosion.
While Aznar and Foreign Minister Ana Palacio said the world should "stand firm in the face of terrorism" and maintain the military mission, left-wing opposition parties said the blast had called into question the wisdom of a continued Spanish presence in Iraq as an occupation force.
Socialist Party president Manuel Chaves called for a parliamentary debate "leading to the exit" of Spanish forces.
"Many Spaniards are concerned at what the armed forces are doing as an occupation force in Iraq," said Chaves.
The leader of the far left United Left grouping, Gaspar Llamazares, was more succinct in demanding "the abandonment of Spanish engagement in the occupation of Iraq and the return of the soldiers."
Aznar, speaking from his summer holiday base on the island of Menorca, preferred to demand increased international cooperation to prevent further attacks which sought "to derail attempts to bring peace and stability" to Iraq.
"This is an attack on the United Nations, against the international community, hitting at the heart of international legitimacy," added Aznar, who made an emotive appeal justifying the military presence in Iraq.
"Iraq is a country which has been liberated from a tyranny and a cruel dictatorship," said the Spanish leader.
The secretary general of Aznar's Popular Party Javier Arenas, who is also public administration minister, firmly rejected the idea that the blast was a response to military occupation.
"It's terrorism, pure and simple," said Arenas, adding that Madrid would continue to play a full role in the reconstruction programme.
But Aznar's administration is increasingly out of step with public opinion, with editorials in the El Pais and El Mundo newspapers predicting that the blast would bring the whole enterprise of using foreign troops into question.
Spanish popular opinion was strongly opposed to the Iraq conflict in the first place and Aznar's government faced huge anti-war street demonstrations.
The Spanish force, stationed at Ad-Diwaniyah and An Najaf some 160 kilometres (100 miles) south of Baghdad, operate under Polish command alongside a 1,200-strong Central American force which includes troops from Honduras, El Salvador, Nicaragua and the Dominican Republic.