Canada has secured a Baghdad compound for a new Iraqi embassy and hopes to begin staffing it in mid-2006.
Security in the war-torn country is a key concern and renovations to the property will include reinforcement designed to resist bomb blasts.
Canada touts its increased activity in Baghdad as an expression of international support for Iraq's new government and its fledgling democracy.
“It's important for the stability of the country but also for the region, and ultimately for the world,” said John Holmes, Canada's acting ambassador to Iraq.
“We wanted to send a signal that we support the transition and the development of a democracy in Iraq.”
Canada ended normal diplomatic relations with Iraq following Saddam Hussein's invasion of Kuwait in August 1990.
Once the renovations are complete the government will assess whether it's safe enough to start moving Canadian diplomats in.
Ottawa hopes to start moving employees there by next summer, but the situation remains volatile and uncertain, Canadian Press reports.