Qasem Muslah, a commander in the state-sponsored Hashed al-Shaabi paramilitary coalition, is the first high-ranking official in the powerful group to have been arrested in relation to a wave of murders of pro-democracy activists and journalists that started in 2019.

"At dawn in Baghdad, police intelligence arrested Qasem Muslah, Popular Mobilisation Forces (Hashed) operations chief for Anbar province, who gave the order to kill Ihab al-Wazni on May 9 and another activist Fahim al-Taie in December 2019," the security source said.

"We initially had clues about the perpetrators of the murders and verification allowed us to identify with certainty the person who was behind these criminal operations," the source added.

Anti-government campaigner Wazni was shot dead outside his home by men on motorbikes using a gun equipped with a silencer early on May 9 in the holy shrine city of Karbala, sending protest movement supporters onto the streets to demand an end to such bloodshed and official impunity.

Wazni had for many years criticised Iraqi armed groups and Iran's influence in the country, leading protests in Karbala, where pro-Tehran armed groups hold major sway.

Killings, attempted murder and abductions have targeted more than 70 activists since a protest movement erupted against government corruption and incompetence in 2019.

Authorities have consistently failed to publicly identify or charge the perpetrators of the killings, which have not been claimed.

Activists have repeatedly blamed Iran-linked armed groups and are convinced the perpetrators are known by security forces but have not been arrested out of fear of Iran, despite government pledges to act.

Directly after Muslah's arrest security forces barred entry to the high-security Green Zone in the heart of the capital over concerns of reprisals.

The Hashed had quickly issued a statement vowing Muslah "would be released in the coming hours".

Several thousand people protested in Baghdad on Tuesday to demand justice over the deadly attacks on activists and journalists.

Two protesters were shot dead and 150 people were injured -- the majority security forces -- during the rallies, tweeted Ali al-Bayati, a member of the Iraqi government's human rights commission.

After the protests, Prime Minister Mustafa al-Kadhemi vowed to open an investigation "to establish the truth of what happened" at the demonstration.