The announcement was the latest sign of an easing of tensions between the two sides and comes a week after Baghdad lifted an air blockade of the autonomous Kurdish region in northern Iraq.

Federal authorities had imposed the blockade and stopped paying the salaries to Kurdistan after it organised in September an independence referendum rejected as illegal by the central government.

"The finance ministry of the central authorities has transferred the salaries of all the civil servants in Kurdistan, including the peshmerga," the office of Prime Minister Haider al-Abadi said on Twitter.

Iraqi government spokesman Saad al-Hadithi said in all "around 317.5 billion Iraqi dinars" (around $262 million) had been transferred on Monday to cover salaries for one month.

A similar amount would be sent to Kurdistan every month as long as authorities there respected conditions laid out by Baghdad, he added.

Officials in the Kurdish capital Arbil had refused to pay the civil servants, arguing that it was up to Baghdad to cover their salaries.

But the federal authorities said Arbil must first hand over to Baghdad revenues it earns from oil sales, and also demanded an audit to determine the number of civil servants in Kurdistan.

Earlier this month, Iraq's parliament adopted an $88.5 billion budget for 2018, with Kurdish lawmakers boycotting the vote to protest against a cut in the amount allocated to their autonomous region.

Kurdistan's part of the national budget was reduced from 17 percent to 12.6 percent.

The peshmerga took control of the northern province of Kirkuk, home to key oil fields, in June 2014 after federal forces withdrew in the face of an offensive by the Islamic State group.

Iraqi Kurds overwhelmingly backed independence in the non-binding referendum held on September 25.

In response, Baghdad demanded the vote be annulled and imposed air and trade restrictions on the Kurdish region.

Late last year, federal forces recaptured the oil fields, severing a key financial lifeline for the Kurds.

On Tuesday last week, Abadi said the airports of Arbil and second city Sulaimaniyah would again "open to international flights" after a nearly six-month air blockade.

The ban forced all Kurdistan-bound international flights to be rerouted to Baghdad, which also imposed entry visas on foreigners wishing to visit the Kurdish region.