Iraq will renegotiate a massive weapons deal with Russia, a spokesman said on Monday, after Baghdad cancelled a $4.2 billion agreement that would have made Moscow Iraq's biggest supplier after the US.

The cancellation on account of graft concerns of the initial deal, announced last month while Iraqi Prime Minister Nuri al-Maliki was visiting Moscow, was a setback for Russia's attempts to firm up its slipping foothold in the Middle East and also threw into doubt efforts by Iraq to equip its armed forces.

"The Iraqi government has not signed any deal to buy weapons from Russia so far, but the process is ongoing to purchase weapons from Russia because of Iraq's needs," government spokesman Ali al-Dabbagh said in a statement.

He said Iraq's National Security Council had decided on Sunday to "fully renegotiate" with Moscow, and had formed a new committee to do so.

"It will renegotiate with Russia to put an end to suspicions of corruption in the weapons deal," Dabbagh said.

Maliki's spokesman said on Saturday that the deal valued at more than $4.2 billion (3.3 billion euros) had been cancelled because of suspicions of corruption.

Had the announced deal been finalised and implemented, it would have made Russia Baghdad's biggest arms supplier after the United States.

Russian media said the deliveries covered 30 Mi-28 attack helicopters and 42 Pantsir-S1 surface-to-air missile systems.

Discussions were also said to be underway for Iraq's eventual acquisition of a large batch of MiG-29 fighters and helicopters, along with heavy weaponry.

The statement announcing the deals said they were secretly discussed as early as April and revisited again in July and August during visits to Russia by Iraqi delegations that included acting Defence Minister Saadun al-Dulaimi.