Baghdad ? They protect U.S. diplomats, guard supply convoys and perform dangerous tasks for a military stretched to the limit by the conflict in Iraq. But the presence of armed civilians operating outside both U.S. military and Iraqi law has long angered Iraqis.

That anger exploded Monday when the Interior Ministry announced that it had revoked the license of Blackwater USA after what it said was the fatal shooting of eight Iraqi civilians following a car bomb attack against a State Department convoy.

The order, if carried out, would deal a severe blow to U.S. government operations in Iraq by stripping diplomats, engineers, reconstruction officials and others of their security protection.

The presence of so many visible, aggressive Western security contractors has angered many Iraqis, who consider them a mercenary force that runs roughshod over people in their own country.

Sunday’s shooting was the latest in a series of incidents in which Blackwater and other foreign contractors have been accused of shooting to death Iraqi citizens. None has faced charges or prosecution.

Secretary of State Condoleezza Rice telephoned Prime Minister Nouri al-Maliki late Monday and the two agreed to conduct a “fair and transparent investigation” and hold any wrongdoers accountable, said Yassin Majid, an adviser to the prime minister. Rice was expected to visit the Mideast today.

Deputy State Department spokesman Tom Casey said Rice “told the prime minister that we were investigating this incident and wanted to gain a full understanding of what happened.”

“She reiterated that the United States does everything it can to avoid such loss of life, in contrast to the enemies of the Iraqi people who deliberately target civilians,” Casey said.

Majid made no mention of the order to expel Blackwater, and it was unlikely the United States would agree to abandon a security company that plays such a critical role in American operations in Iraq.

The U.S. clearly hoped the Iraqis would be satisfied with an investigation, a finding of responsibility and compensation to the victims’ families – and not insist on expelling a company that the Americans cannot operate here without.

Details of Sunday’s incident were unclear.

Interior Ministry spokesman Abdul-Karim Khalaf said eight civilians were killed and 13 were wounded when contractors believed to be working for Blackwater USA opened fire on civilians in the predominantly Sunni neighborhood of Mansour in western Baghdad.