A spokesman for the Swiss-based organisation told Aljazeera.net that the ICRC will, however, operate in the north of Iraq.
Florian Westphal said last month’s car bomb attack at its Baghdad headquarters, which killed two of its Iraqi employees, dealt a serious blow to the organisation’s operations.
He said the ICRC was forced to consider a number of options, in order to ensure the safety of its staff.
"We decided against the option of military protection as it would go against our status as a neutral humanitarian body. We could not take the risk of being associated with one side or the other," he added.
The Red Cross move will be seized by critics of the US occupation, who have accused Washington of failing to provide adequate security for humanitarian agencies.
Westphal remains optimistic though, saying the closure of its offices does not mean the organisation will cease operating in the whole of the country.
“We will remain in northern Iraq. Our activities will focus on visiting prisoners detained by the occupying forces, re-establishing family contacts and providing emergency aid in the areas of water and medicine”, he said.
The ICRC’s assistance in water relief extended to technical support, ensuring pumping stations worked and provided drinking water to areas such as Basra in the south.
"We could not take the risk of being associated with one side or the other"
Westphal expressed his disappointment at the “forced” closure of the offices but said “we will keep an eye on the situation and hope things will change in order for us to restart what we can’t do at the moment.”
Ten civilians were killed in the Baghdad attack at the ICRC headquarters.
The attack was reportedly the bloodiest on an international organisation since a massive truck bomb devastated the UN’s headquarters in the capital on 19 August, killing 22 people, including Sergio Vieira de Mello, the top UN envoy to Iraq.
The car bombing was the first the ICRC had suffered in its 140-year history. The Red Cross has been operating in Iraq since 1980.