A multi-car Australian embassy convoy was travelling through the high security Green Zone when the device went off, an Iraqi security source said, declining to be identified.

The explosion resulted in "no wounded" and "minor damage" to one of the cars, the official said, adding that the convoy "was probably not the target".

The attack was not immediately claimed and the Australian embassy, which is located in the Green Zone, did not immediately comment.

A spokesman for Iraq's foreign ministry "deplored the incident" and expressed his country's "solidarity" with Australia.

Baghdad's Green Zone is deemed an ultra-secure area and it houses embassies and government buildings, including parliament and several ministries.

Several thousand supporters of Shiite leader Moqtada Sadr have in recent weeks staged a sit-in around parliament, seeking to press political opponents into agreeing to dissolve the legislature nearly a year after inconclusive elections.

During a sectarian conflict between 2006 and 2008, bomb attacks hit Baghdad nearly daily but have been much rarer in recent years.

The last significant attack in the Iraqi capital killed around 30 people at a market in Sadr city, a Shiite district, in July last year. The Islamic State jihadist group claimed the bombing.