Iraq, long a proxy battleground between the United States and Iran, was quickly dragged into the Middle East war triggered by US and Israeli strikes on Iran on February 28.

A cloud of black smoke rose above the US diplomatic mission shortly after the sound of explosions on Saturday morning, an AFP journalist said.

Two security officials told AFP the embassy complex was struck by a drone.

The US embassy did not immediately respond to AFP's request for comment on the incident.

It is the second time the US embassy has come under attack in Baghdad since the start of the war.

Later on Saturday, the embassy issued an updated security alert urging citizens to "leave now" but telling them not to come to the embassy in the capital or the consulate general in Erbil "in light of the ongoing risk of missiles, drones, and rockets in Iraqi airspace".

"Iran-aligned terrorist militias have repeatedly attacked the International Zone" in Baghdad, it said on X.

"There have also been repeated attacks in the area around the Erbil International Airport and the Consulate General," it added.

Several Tehran-backed armed groups, which Washington has designated "terrorist organisations", allied under an umbrella movement known as the Islamic Resistance in Iraq, have claimed daily drone and rocket attacks against US bases in Iraq and the region.

Since the start of the war, several attacks targeting members of those groups across Iraq have been blamed on the US and Israel.

- Leader wounded? -

The attack on the embassy took place shortly after two strikes targeted the powerful Iran-backed group Kataeb Hezbollah in Baghdad and killed three of its members, including a commander.

The first strike hit a house in the Arasat neighbourhood, where several Iran-backed groups have a presence. Two hours later, a second attack struck a vehicle in the Nahrawan district.

Security sources initially said two group members had been killed, including "a key figure" in the house, and another in the attack on the vehicle.

The death toll was later revised to three, all killed in the strike on the house, a pro-Iranian source told AFP.

Kataeb Hezbollah held a funeral procession in Baghdad for three fighters, including commander Abou Ali al-Amiri.

Local media reports have suggested that the group's top leader Ahmad al-Hamidawi was wounded in the attack on the house. AFP has not been able to independently verify this information.

The pro-Iran source said the strike was a "targeted assassination" attempt.

A resident of the Arasat district, told AFP "no one in the neighbourhood knew that the house, which is very modest, was occupied by Kataeb Hezbollah".

None of the sources said who they believed to be behind the strikes on the pro-Iranian faction, and the Kataeb Hezbollah group has not commented.