Private security companies in Iraq face renewed hostility after two women travelling with their children were killed when contractors opened fire on a car in Baghdad yesterday.

The incident, involving a company named as Unity Resources Group, came as the Iraqi Government demanded that the US Blackwater company pay £4 million compensation to the families of each of the 17 people killed in a shooting last month. The Blackwater incident triggered outrage among Iraqis, who see security contractors as private armies that act with impunity.

Unity Resources, which is based in Dubai, said that it was working with the Iraqi authorities to investigate the shooting. Its guards had given warnings to a car that was approaching their convoy at speed, the company said. The guards opened fire when the vehicle failed to stop. It had no immediate details on whether there were any casualties. The company was also unable to say who was being escorted at the time.

The Iraqi Government and police said that private security guards escorting a convoy of vehicles through Karrada, in central Baghdad, shot dead two women in their car. They did not name the company involved.

Iraq timeline: five years of conflict

From accusations that the weapons of mass destruction dossier had been sexed-up to withdrawal of British troops from Basra

Multimedia

• Poll: Was Iraq war worth the sacrifice?

• Audio slideshow: Iraq conflict explained

• Pictures: Iraq, war and aftermath

Related Internet Links

• Read the Inside Iraq blog from our team in Baghdad

Related Links

• Blackwater denies rogue mercenary charge

• Blackwater boss to be quizzed over killings

• Blackwater guard 'turned gun on colleague'

The women drove into an intersection about 100 metres away from a convoy of four SUVs, a policeman who witnessed the incident told Associated Press. The men in the SUVs threw a smoke bomb in an apparent attempt to warn the car against coming forward, he said. The woman driving the car tried to stop, but was killed along with the passenger when two of the guards in the convoy opened fire.

Basim Mohammed, a shopkeeper, told Reuters: “An Oldsmobile came out of this side road and it had two women in the front and children in the back,” told Reuters.

“They fired a warning shot when they were about 80 metres away, which probably made them panic because they went forward a little bit, and [the security guards] started firing at her from all directions.”

Times Recommends

• LA profits from Michael Jackson stimulus
• Berlusconi's absent wife causes G8 headache
• Chimps that took a punishing step for Man