Washington was angered by dozens of missile and bomb attacks on US diplomatic and military facilities in Iraq over the past year.
`This is just a small reduction to ensure security from the US side. They will come back. This is just a small adjustment for security,` said an anonymous Iraqi official.
Another top Iraqi official confirmed this was an effort to `mitigate risks`.
US Embassy in Baghdad.
It is unclear how many of the hundreds of diplomatic staff at the embassy will be withdrawn by the US.
The spokesman said US ambassador Matthew Tueller remained in Iraq and the embassy `continues to operate`.
Washington has blamed dozens of rocket and roadside bomb attacks on pro-Iranian militia groups, and has retaliated twice by bombing one of these groups, Kataeb Hezbollah.
As the attacks continued, the US issued an ultimatum to Iraq, threatening to completely close its embassy in the country.
On November 17, a series of rockets attacked several residential areas in Baghdad, killing a little girl.
At the end of November, a Western official said the US was studying three options, including a partial withdrawal of staff.
Iraqi and Western officials are witnessing a chaotic few weeks before President Donald Trump hands over the White House.
`We have that feeling that in just a few weeks until he leaves office, who knows what could happen,` the Western official said.
Tensions have increased in the Middle East recently after famous Iranian nuclear scientist Mohsen Fakhrizadeh was assassinated in Tehran.