Three protesters went on a hunger strike in the capital to protest against conditions in which Palestinians are being held.
More than 800 Palestinian families have been evicted from their homes in Iraq since the fall of the previous government.
Many now live in tents inside a sports club, according to the United Nations High Commissioner for Refugees.
Former President Saddam Hussein's government gave Palestinian families subsidised housing.
But since his removal, landlords have been evicting Palestinians - leaving many with little choice but to live in the camp run by the Red Crescent in Baghdad's Haifa sports club.
Christian Garcia, a French demonstrator from the International Civil Campaign for the Protection of the Palestinian People, is determined to bring attention to the issue.
"We are on hunger strike to demand the coalition provide immediate rehousing for Palestinian refugees and their right to return to Palestine," he said, adding the hunger strike would last one week.
He also demanded the liberation of three Palestinian diplomats arrested by US occupation forces on 28 May in a raid which left the Palestine Mission completely destroyed.
Garcia is living in a tent among an estimated 1,300 Palestinians who have settled in the camp, without either electricity or water.
Two women - one Irish and the other Polish, from the group Voices in the Wilderness - are also taking part in the hunger strike.
Some of the families have been in the camp for three months.
The Geneva-based UNHCR has helped accommodate the evicted in the Haifa camp, but with temperatures soaring to the mid 40s Celsius the measure was only a provisional solution, spokesman Kris Janowski added.
Up to 90,000 Palestinians are believed to be living in Iraq.
A doctor from the Palestinian Red Crescent said the group was hoping to convince occupation forces in Iraq to give Palestinian families vacant houses in Baghdad as a temporary solution.