Erik Prince, the founder of the controversial US private security firm Blackwater, has said he will remain the company's chairman after announcing he was stepping down as chief executive officer.

His resignation as CEO on Monday comes as five former Blackwater guards await trial in the US in connection with the killings of 17 Iraqis in a shooting incident in Baghdad, the Iraqi capital, in 2007.

The guards are alleged to have opened fire on civilians in Nisoor Square in an unprovoked attack that provoked a wave of outrage in the country.

The five have denied the claims, saying they fired when the US state department convoy they were guarding came under attack.

'Excessive force'

A sixth Blackwater guard has brokered a deal with prosecutors, pleading guilty to killing one Iraqi and wounding another.

The company said Prince will focus his efforts on a private equity venture unrelated to the firm.

Prince, who founded Blackwater in 1997, said Joseph Yorio, a former US army officer, will become its new president, and Danielle Esposito, a current employee, will become the chief operating officer as part of what he called the company's "continued reorganisation and self-improvement".

The company changed its name to "Xe" last month, shortly after Iraqi officials  revoked the company's licence to operate in the country.

The Iraqi interior ministry said the ban followed the firm's "improper conduct and excessive use of force" in the 2007 incident.