The office of Nuri al-Maliki, the prime minister, issued a statement on Sunday that not only defended the national flag but implied that the Kurds' own banner was illegitimate.
"The present Iraqi flag should be hoisted on every inch of Iraqi soil until the parliament takes a decision about it," read the brief message, which did not refer directly to the controversy.
Al-Maliki is an Arab from the Shia Muslim majority.
The dispute exposes an increasingly bitter rift between Arabs and Kurds, the second great threat to Iraq's survival as a state after the growing sectarian conflict between Arab Sunnis and Shia.
Last week Massoud Barzani, the president of the Kurdish region in northern Iraq, banned the Iraqi flag from being hoisted on government offices in the region, leaving the Kurdish colours to fly alone and raising separatist tensions.
"According to the Kurdistan Administration of Iraq's decree number 60, we decide to hoist the flag of Iraqi Kurdistan officially on all offices and government institutions in the Kurdistan region," Barzani's office said last Friday.
Iraq's sizeable Kurdish minority associates Iraq's red, white and black banner with ousted leader Saddam Hussein's hated Baath party, although it has been retained as the national flag by the post-Saddam government in Baghdad.
Under the order issued in the northern town of Arbil, "regions in Iraq's Kurdistan which have been hoisting the Baathist flag should lower it and hoist the flag of Kurdistan in its place".
"The present Iraqi flag should be hoisted on every inch of Iraqi soil until the parliament takes a decision about it"
Iraqi prime minister
On May 7, the Kurdish administrations of Arbil and Sulaimaniyah provinces were united with one parliament and government for the whole of the northern Kurdish region, which enjoys broad self-rule.
Before unification some official buildings in the Sulaimaniyah region, which was ruled by Patriotic Union of Kurdistan (PUK) led by Jalal Talabani, the Iraqi president, used to hoist the Iraqi flag along with the PUK party flag.
Barzani's Arbil administration never hoisted the Iraqi flag.
Last year Barzani said that Iraq's flag "dates back to 1963 since when many pogroms and mass-killings were committed in its name. Therefore, it is impossible to hoist this flag in Kurdistan".
Iraq's Kurdish minority has enjoyed wide autonomy since Saddam's defeat in the 1991 Gulf war over Kuwait and strongly supported the 2003 US-led invasion which unseated him.
Since Saddam's fall, Kurdish politicians have taken part in national politics and put their historic demands for independence on hold. But, as violence rages around the country, separatist tensions remain high.
Kurds flying the Kurdistan flag
In April 2004 the then interim government of Iraq attempted to resolve the controversy over the flag, which is emblazoned with three green stars and "God is greatest", by proposing a new national banner.
A new blue and white design, however, caused much controversy - some felt it was too close to the Israeli flag - and it was swiftly abandoned.
Most Arab Iraqis accept the 1963 design as their national flag, although the design of the Islamic slogan - which was reportedly based on Saddam's own handwriting - has been changed to a generic typeface.
Kurdistan's banner is three red, white and green horizontal bars emblazoned with a golden sun motif. It flies across the Kurdish region over government buildings and military bases.
Iraq's tri-colour is based on that of fellow Arab states Egypt and Syria.