Iraqi Prime Minister Nuri al-Maliki on Sunday warned of "polarisation" across the region as he led a low-key ceremony marking the anniversary of the founding of the country's armed forces.

Maliki said "regional competition" was negatively affecting Iraq, an apparent reference to the violence in Syria where mainly Sunni rebels are fighting President Bashar al-Assad's regime, and two weeks of rallies in Iraq's western Anbar province, which is mostly Sunni.

"Regional competition and polarisation exists in the region, and what is surrounding us, sectarian tension, is affecting Iraq badly," Maliki said in a speech to army officers in Baghdad's heavily fortified Green Zone.

"Our forces now are not fighting terrorist groups or isolated criminal groups, they are fighting groups backed by dangerous Takfirist (extremist) ideology."

Maliki's Shiite-led government has faced two weeks of angry protests in Sunni-majority provinces, with demonstrators complaining of their community being targeted by the authorities.

Officials also fear the impact of the conflict in neighbouring Syria, and have tried to maintain a delicate balancing act of not calling for Assad's regime, dominated by the Alawite offshoot of Shiite Islam, to go and not explicitly backing it.

In his speech marking the 92nd anniversary of the founding of Iraq's army, Maliki also called for the armed forces to be equipped to be a defensive force, but added that Iraq did not want an "arms race."

"The army today is responsible for protecting a great country and it must be up to the task," Maliki said. "It should be well trained and equipped with modern weapons, and that is what we are seeking for it."

Army Day celebrations in Iraq were much more low key than in previous years.

Officials cited the requirement for tens of thousands of soldiers to maintain security at Arbaeen commemorations, when pilgrims walk to the shrine city of Karbala for a mourning ritual for a revered figure in Shiite Islam.

Many military units have also been deployed close to disputed territory in north Iraq that is also claimed by the autonomous Kurdish region, and to Iraq's western border with Syria.