US forces in Iraq may not have the resources to control the activities of thousands of private contractors working alongside the military, the Pentagon has admitted.

As Iraqi and US investigaters examine the recent shooting of 11 people, killed by security guards working for the US Embassy in Baghdad, the Pentagon has dispatched a separate, high-level team to review whether American commanders are policing contractors working for them properly.

The five-man team was sent to Baghdad on Sunday by Robert Gates, the US Defence Secretary, who is under pressure to rein-in private security companies, that have earned a reputation in Iraq for being aggressive and trigger-happy.

The issue has created a big political dispute between Washington and Baghdad after the shooting incident on September 16, when guards employed by the Blackwater company opened fire in central Baghdad.

The US-based company insists that its men used forced to protect a convoy carrying US diplomats when it came under attack by insurgents. The Iraqis are adamant that all those killed were innocent civilians.

Foreign security guards operate under the same rules of engagement as coalition troops. They also enjoy immunity from prosecution by the Iraqi authorities. The Iraqi Parliament now wants to strip them of immunity and make they accountable to local laws. It also wants Blackwater expelled from the country.

Mr Gates admitted that he had “concern about accountability and oversight”, suggesting that stricter controls over private guards may be put in place.

He also made clear that the 160,000 US troops in Iraq could not function without the 137,000 private contractors in the country. About 7,300 are hired for security work, including protecting buildings and officials, training the Iraqi military and providing support for American soldiers. The figures do not include guards working for the US State Department, the Foreign and Commonwealth Office and other foreign organisations in Iraq.

“If we are to have a serious combat capability, we do not have the manpower to be able to perform a lot of these tasks,” Mr Gates told the US Senate.

The issue of private security companies coincided with the Pentagon request for Congress approve an additional $42.3 billion (£21.15 billion) for spending on the wars in Iraq an Afghanistan. If approved, Washington would have spent $760 billion for the two wars.

A quarter of the extra money is needed to buy 7,000 more mine resistant ambush protected (MRAP) vehicles to defend US troops from roadside bombs.

Democrats in the Senate expressed concern at the rising costs of the war. Robert Byrd, the chairman of the Appropriations Committee, described the conflict as “nefarious” and “infernal”.

“We do not create a democracy at the point of a gun,” said the West Virginia senator. “Sending more guns does not change that reality. And this committee will not rubber-stamp every request that is submitted by the President.”

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