Iraq has prepared a draft law to control the private security companies in Iraq after a fatal shooting incident involving Blackwater.

The bill, being prepared by Iraqi Interior Ministry, will make companies 'responsible for actions taken by their employees on the streets,' said ministry spokesman Abdul Karim Khalaf.

"It covers all aspects relating to the activities of companies who will be governed by the laws of Iraq and fall under the authority of the interior minister," Khalaf told a press conference.

The Blackwater security guards have been accused of opening fire and killing at least 11 Iraqi civilians on a Baghdad street September 16.

The statement contrasted sharply with strident calls last week for Washington immediately to replace Blackwater.

Prime Minister Nouri al-Maliki had said that the incident causes serious challenges to the sovereignty of Iraq and cannot be accepted.

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