No injuries were reported.

The blast happened amid efforts by the Australian diplomatic mission in Iraq to mediate between influential Shia cleric Muqtada al-Sadr and an Iran-backed faction of rival Shia parties, according to security officials, to end one of Iraq's worst political crises in recent years.

Foreign Ministry spokesman Ahmad al-Sahaf condemned the attack and said Iraq was committed to protecting all diplomatic missions in the country.

Caretaker Prime Minister Mustafa Al-Kadhimi has been unsuccessful in trying to bring the quarrelling groups to a settlement. Al-Sadr's party declined to attend a meeting Al-Kadhimi held last week.

Despite the explosion, the Australian convoy was able to enter the Green Zone.

The followers al-Sadr and his political rivals, a coalition of Iran-backed Shia groups called the Coordination Framework, have been at odds since last year's parliamentary elections.

Al-Sadr won the largest share of seats in the October vote but failed to form a majority government, leading to what has become one of the worst political crises in Iraq in recent years. His supporters late July stormed the parliament and have held frequent protests there.

The firebrand clerics' supporters have regularly protested, demanding the dissolution of parliament and early elections.

On Tuesday, Al-Sadr's supporters pitched tents and protested outside the Supreme Judicial Council, accusing it of being politicized in favour of their Iran-backed allies.