Smoke was rising from the Swedish embassy building and dozens of demonstrators were still on the scene, while large numbers of Iraqi riot police had been deployed, an AFP correspondent said.

The protest had been organised by supporters of the turbulent religious leader Moqtada Sadr.

"We didn't wait until morning, we broke in at dawn and set fire to the Swedish embassy," a young demonstrator in Baghdad told AFP on Thursday, before chanting the leader's name.

It was not immediately clear whether the embassy was empty at the time of the attack, or if staff had been evacuated.

Iraqi authorities did not immediately react to the incident.

The assault comes after Swedish police authorised an assembly on Thursday outside the Iraqi embassy in Stockholm, where organisers plan to burn a copy of the Koran as well as the Iraqi flag.

Swedish media reported that Salwan Momika, an Iraqi refugee in Sweden, had organised the event.

Salwan burned a few pages of a copy of the Koran in front of Stockholm's largest mosque on June 28 during Eid al-Adha, a holiday celebrated by Muslims around the world.

That incident prompted supporters of Moqtada, an influential religious leader and political dissident in Iraq, to storm the Swedish embassy in Baghdad the following day.