"The embassy's operations and its expatriate staff have been temporarily relocated to Stockholm for security reasons," the foreign ministry told AFP in a statement.

The move came after hundreds of Iraqis stormed the Swedish embassy in Baghdad before dawn on Thursday and set fires withing the compound after Sweden permitted a protest in which a Koran was damaged.

Iraq's government condemned the attack, expelled Sweden's ambassador and vowed to sever ties and suspending the operating licence of Swedish telecom giant Ericsson.

In less than a month, Sweden-based Iraqi refugee Salwan Momika has staged two protests that involved desecrations of the Koran.

In late June, he burned pages of the Muslim holy book outside Stockholm's main mosque.

During his Thursday protest outside the Iraqi embassy in Stockholm, he stepped on the Koran but did not burn it.

But his latest demonstration triggered renewed condemnation and calls for protest across the Muslim world.

Around the time of the protest, Iraqi Prime Minister Mohamed Shia al-Sudani "instructed the Swedish ambassador in Baghdad to leave Iraqi territory".

The decision was "prompted by the Swedish government's repeated permission for the burning of the Holy Koran, insulting Islamic sanctities and the burning of the Iraqi flag", Sudani's office said.

Swedish Foreign Minister Tobias Billstrom called the protest an "offensive and disrespectful act, and a clear provocation.

"We strongly reject these acts, which in no way reflect the Swedish Government's opinions," Billstrom said in a statement.

But he also pointed out that a "constitutional right to freedom of assembly, freedom of expression and freedom to demonstrate".

The affair has also caused diplomatic tensions with several other Middle Eastern countries. Saudi Arabia and Iran both summoned the Swedish ambassadors to lodge protests.