​Security Guard Shot Dead at the Australian Embassy in Baghdad

A security contractor has been killed after a sniper opened fire at Australia's embassy in the Iraqi capital of Baghdad.

The 34-year-old former special forces soldier was shot in the head by a fellow security contractor, while the pair were drinking together in the embassy's accommodation. Differing reports put the incident occurring either late Wednesday evening or in the early hours of Thursday morning (Baghdad time).

Foreign minister Julie Bishop has confirmed the guard's death today, saying the "Government extends its condolences to the family of the Australian man over this tragic incident. All appropriate assistance is being provided to his family."

The man was working as a contractor for Unity Resources Group, a Dubai-based group that provides security for the embassy.

The Age is reporting that another employee from Unity is being questioned about the shooting at Sather Air Base, some 16 kilometres out of Baghdad.

Unity has been under scrutiny in the past few months with reports emerging of "security, weapons safety, and diplomatic breaches."

However, Department of Foreign Affairs and Trade secretary Peter Varghese defended the group back in February, telling a Senate hearing that these accusations were being levelled by "disgruntled former employees."

DFAT has recently halved its spending on security contracts. Julie Bishop has promised a full investigation to the events that led up to this week's fatal shooting.

More as this story develops.