AFP reporters heard several large blasts, followed by rapid-fire sounds and red flares lighting up the sky, indicating that the embassy's C-RAM rocket defence system was deployed.

A spokesman for the US-led coalition said Iraqi intelligence had confirmed an indirect fire attack on the US embassy but declined to comment on the C-RAM usage.

Since October 2019, nearly 90 deadly rocket attacks and roadside bombs have targeted foreign embassies, troops and other installations across Iraq.

They have infuriated the US, which responded twice by bombing Kataeb Hezbollah and other hardline pro-Iran factions it blames for the spree of attacks.

Last month, Washington threatened to close down its diplomatic compound in Baghdad's high-security Green Zone if the attacks did not stop.

Its ultimatum prompted pro-Iran factions to announce a truce for an unspecified amount of time. The rockets immediately halted, with Tuesday's attack the first in more than a month.

It came just hours after US Secretary of State Mike Pompeo, who Iraqi sources said had relayed the earlier threat to close the embassy, called Iraqi Prime Minister Mustafa al-Kadhemi.

Around the same time, the US announced it would slash troop levels in Afghanistan and Iraq to 2,500 in each country, their lowest levels in nearly 20 years of war.

Washington still has some 3,000 troops stationed across Iraq as part of the US-led coalition helping the country fight the Islamic State group since 2014.

The coalition had already significantly drawn down its troop levels this year, partly due to Covid-19 travel restrictions.