An Iraqi traffic policeman told Sunday how Blackwater security guards caused carnage when they opened fire on civilians in Baghdad, as a senior officer probing the shooting insisted it was unprovoked.

One week after the gunbattle that killed 10 civilians and enraged Iraq's government, police and interior ministry officials were still gathering witness accounts and hunting video footage perhaps taken by amateurs on mobile phones.

Blackwater insists the US convoy it was escorting came under attack by insurgents before its guards opened fire but the Iraqi government was incensed by the incident and said it would revoke the security company's licence.

Traffic officer Ali Khalaf, who was on duty on Sunday last week in Al-Yarmukh, in the mainly Sunni Mansour area of west Baghdad, told AFP he had witnessed the entire incident.

"The American convoy arrived... and as usual I stopped the traffic to allow them to pass," Khalaf said.

As they often do, guards from the US firm -- the largest private security operators in Iraq -- hurled water bottles at cars to stop traffic as they drove through.

"Then without reason, they opened fire. Four shots, in the air, aiming just above the cars," Khalaf said.

"But one of the bullets struck a man in his car. I went to his aid but he was already dead, his body was slumped on the dashboard.

"His wife was then killed before my eyes by a bullet that hit her in the head."

Khalaf said he ran to take shelter inside his little hut as the gunfire continued.

The car with the dead couple "continued to move, with its doors open and the bodies inside -- like a phantom vehicle."

"The Americans fired at everything that moved, with a machine gun and even with a grenade launcher. There was panic. Everyone tried to flee. Vehicles tried to make U-turns to escape."

According to Khalaf, people then left their cars and tried to flee for cover, some being struck down as they ran. A car was hit by two grenades and burst into fire, engulfing its occupants in flames.

"There were dead bodies and wounded people everywhere, the road was full of blood. A bus was also hit and several of its occupants were wounded," said the traffic officer.

Two small black helicopters that always accompany Blackwater on security missions swooped down and sprayed the scene with machine gun fire, Khalaf added.

On Wednesday, the Iraqi and US governments announced they had set up a joint commission to investigate the shootings as well as to examine the broader question of rules governing foreign security companies operating in Iraq.

Despite opposition from Iraqi Prime Minister Nuri al-Maliki, Blackwater, which escorts US embassy personnel, was back on the streets of Baghdad on Friday after being grounded for four days.

According to a senior policeman involved in the investigations, other witnesses are equally adamant that Blackwater opened fire without provocation.

"The Americans say that the convoy first came under small arms fire. That is totally false," the officer told AFP, asking not to be named because he is not entitled to speak to the media.

"None of the witnesses we have interviewed speak of an attack," he said.

"There is at least one video, shot by police using a digital camera just moments after the shooting, which shows the victims," said the police officer. "This video is in our hands and we are examining it."

He did not rule out the possible existence of other videos taken at the moment of the shooting, including with mobile phones, given the number of people present at the time.

"The Blackwater guards opened fire on motorists without reason, they were never a target of a single shot or any attack," the officer said.