Russian-made Volga taxis will soon be running alongside tanks and armoured vehicles on the streets of Iraq, according to the BBC.

The report said an order for 5,000 cars placed before the US invaded in March has been allowed to proceed and the first batch of 300 is being delivered now.

Iraq will reportedly also be importing another 11,000 cars, including US models, Nissans and Peugeots, the BBC said.

The BBC said the trade embargo placed on the country during the past decade meant there was limited access to everything which is why the country's current fleet of taxis consists of 1980s Volkswagens and Nissans imported three years ago.

The contract with Gaz was seen by analysts as rewarding Russia for opposing UN sanctions on Iraq, the BBC said, adding that there had been some doubt whether contracts with the Saddam Hussein government would be honoured by the present authorities in Iraq.

The BBC said an official at Iraq's General Vehicle Agency was quoted as saying "We are sticking to past agreements but starting to include American cars in our imports."