Muwafak al-Ani, who submitted his credentials to the Chinese government in January, has ignored orders from the Iraqi occupation government to return home by mid-June, two diplomats said in Beijing.
Iraqi embassy staff are worried about their future and have insisted al-Ani leave, forcing the ambassador to ask Chinese police for help, the diplomats said.
"The ambassador asked China to intervene," a Middle Eastern diplomat said, adding, "He claimed he was threatened."
The Middle Eastern diplomat said the embassy's number two had been ordered by Baghdad’s occupation government to take over. It was unclear if the Iraqi ambassador would give up his position or leave the country.
Security in and around the Iraqi embassy in Beijing has been stepped up in the past few days with policemen standing guard and a police van parked outside.
Al-Ani and up to seven Iraqi diplomats and their families live in the embassy due to a shoestring budget after years of economic sanctions on Iraq.
Both al-Ani and ministry officials could not be reached for comment.
Al-Ani has been involved in diplomatic drama before. In 1991, the Philippines expelled al-Ani, then a first secretary, after linking him to an attempted bombing of the Thomas Jefferson Library in Manila.
An Iraqi national was killed and another injured when the bomb they were attempting to plant exploded prematurely.
Al-Ani denied involvement in the Manila bombing incident and said then he was returning to Baghdad to join the war against the United States.
It was unclear how China, which opposed the United States-led invasion on Iraq, would respond to the latest crisis.