"This issue is related to Iraq's sovereignty, and nobody is authorised to close the airport," acting Transportation Minister Esmat Amer said on Friday.
He said the cabinet decided to dispatch Interior Ministry troops to assume control of the airport from London-based Global Strategies Group, a company that has been providing security at the sprawling facility since last year.
Earlier on Friday, Global said it had suspended operations saying the Ministry of Transportation, which owns the airport, was six months behind in payments.
All flights in and out of the capital were suspended, it said.
A statement by the company, said the ministry, which owns the complex 18km from downtown Baghdad, "is not currently paying the company for the services it has rendered".
The company said it had not been paid since February and complained that flight volume had increased dramatically since it took over security operations July 1 2004.
Security has been a major issue
for airlines using Iraqi airports
Global said its workers would continue securing the facility but that other operations were suspended.
"Once payment is made by the client, Global will resume its work and allow normal operations to resume," a company statement said.
An airport official said Global informed management last week that it planned to stop work because of payment dispute.
"Today at 8am they stopped work," said the official on Friday who asked not to be identified because he was no authorised to speak to the media.
Airport officials say about 15 civilian flights use the airport daily for both domestic and international travel.
The flights are operated by Iraqi Airways, Royal Jordanian Airlines and three companies operating out of the United Arab Emirates - Jobotier, Ishtar and Tigris airlines.
"This issue is related to Iraq's sovereignty, and nobody is authorised to close the airport"
Iraq's acting Transportation Minister
There is service between Baghdad and Basra, Sulaimaniya and Irbil in Iraq as well as Jordan, Syria and the UAE.
In June, the company suspended airport operations for 48 hours for the same reason.
In other news, Iraqi President Jalal Talabani will leave for New York on Friday, heading a high-level delegation to the annual UN summit and a meeting with the President George Bush, the government said.
The statement did not say whether Prime Minister Ibrahim Al-Jaafari will be part of the delegation.
Officials at the prime minister's office said al-Jaafari too would travel to New York for the General Assembly session.
Last month, a tiff erupted between Iraq's Kurdish president and Shia prime minister over who would head the delegation to the annual summit that opens on 15 September.
Talabani will lead the delegation
to UN General Assembly session
Officials said Talabani was displeased by al-Jaafari's insistence that he should represent Iraq at the session and at a subsequent meeting with Bush.
Under Iraq's interim constitution, Talabani leads a three-member council that serves collectively as a head of state.
But al-Jaafari runs the government, similar to Germany which has a president with few powers and a chancellor who governs.
Shia and Kurdish powers have become the dominant forces in Iraq after being suppressed for decades under Saddam Hussein, a secular Sunni Muslim.