The work will entail construction of 5,000 new housing units in Iraq’s second city, as well as a range of schools, hospitals and parks. The company will also build a supermarket and commercial units for up to 2,000 shops.

The work represents the largest construction contract won by an Iranian firm since the US-led invasion in 2003. The award follows a recent visit to Iraq by Manouchehr Mottaki, the Iranian foreign minister, which saw Baghdad and Tehran pledge to boost trade between the two countries.