Swedish authorities had approved an assembly to be held later Thursday outside the Iraqi embassy in Stockholm, where organisers plan to burn a copy of the Koran as well as an Iraqi flag.

Iraqis have been angered by previous events in Sweden and Thursday's protest in Baghdad was organised by supporters of the turbulent religious leader Moqtada Sadr.

An AFP correspondent reported smoke rising from the Swedish embassy building and dozens of demonstrators still on the scene, while large numbers of Iraqi riot police had been deployed.

"We are mobilised today to denounce the burning of the Koran, which is all about love and faith," protester Hassan Ahmed told AFP. "We demand that the Swedish government and the Iraqi government stop this type of initiative."

Some protesters were holding up copies of the Koran, while others were holding up portraits of Mohamed al-Sadr, an important religious cleric and the father of 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.

Several fire engines were also on site to extinguish the blaze, the AFP correspondent said.

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

- 'Urgent investigation' -

Iraq's foreign ministry condemned the embassy torching and called on security forces to identify those responsible.

"The Iraqi government has instructed the relevant security services to conduct an urgent investigation and take all necessary measures to uncover the circumstances of the incident and identify the perpetrators," the ministry said in a statement.

Sweden's foreign ministry told AFP its embassy staff in Baghdad were "safe" following the incident.

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.