US private security firm Blackwater's deal to protect American diplomats in Baghdad will be extended for a year while the FBI investigates a 2007 incident in which the company's guards are accused of killing 17 Iraqis, the State Department said on Friday.

"I have requested and received approval to have task order six - which Blackwater has to provide personal protective services in Baghdad - renewed for one year," Assistant Secretary of State Gregory Starr told reporters.-Reuters