The move is a retaliation for an independence referendum held a week ago by Iraq’s Kurds.
Baghdad and Tehran conduct military exercises near Iraqi Kurdistan border
Iraq took part in the first military exercises with Iran since the Islamic revolution in 1979 as Baghdad applies pressure on Kurds seeking independence in the north.
The joint military exercises were held on the Bashmakh crossing on Monday less than a kilometre away from the Irani-Kurdish border.
The move comes as Iraq’s Kurds look to separate from Iraq with the passing of an independence referendum, which was approved by 92 per cent of Iraqi Kurds.
Iranian state television on Saturday quoted a military spokesman as saying Iran and Iraq “agreed on measures to establish border security and receive Iraqi forces that are to be stationed at border posts”.
"Iraqi and Iranian units began exercises on Monday morning with tanks and infantry only 250 metres from the border," Shwan Abu Bakr, the Kurdish customs chief at the Bashmakh border post said.
The independence referendum has been condemned not only by Iraq’s government but by the international community.
Days after the non-binding referendum passed, Baghdad imposed a flight embargo on Iraq’s autonomous Kurdish region.
Foreigners stranded in Iraqi Kurdistan looking to leave the country via Baghdad were given safe passage to do so by Baghdad on Monday.
Those who had entered the Kurdish region on "regional visas" not recognised by Baghdad could previously not travel to other parts of Iraq.
The Iraqi minister of interior, Qassem Al Araji, said "any person can leave the country via Baghdad without paying a fine or for an exit visa."
Iraq's prime minister Haider Al Abadi on Monday called on Kurdish authorities to cancel the results of its controversial independence referendum in order to establish dialogue on reinforcing unity.
''The Kurdish regional government (KRG) has to cancel the illegitimate referendum results to empower Iraq's unity for a serious dialogue with Baghdad,” Mr Al Abadi said.
He called on the KRG to ''end provocation in the areas it seized and abide by the decisions taken by the federal and constitutional court.''
The non-binding referendum is unlikely to lead to formal independence, but it has escalated long-running tensions with Baghdad, Tehran and Ankara.
In response to Mr Al Abadi's comments Kurdish officials announced that they welcomed an “initiative” from Iraq’s top Shiite cleric Ayatollah Ali Al Sistani who last week called on Iraqi authorities to respect Kurdistan’s rights and urged Kurdish officials to resolve the crisis.
Tehran and Ankara fear that independence could set off unrest among their own Kurdish minorities. While, Washington warns that Kurdish independence would distract from Iraq's battle against ISIL.