Witnesses said that after the attack a helicopter from the private US security firm Blackwater landed near the scene.
"Iraq is still under foreign occupation and Iraqis continue to die in great numbers"
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Reuters Television pictures showed a European-looking man with his head, leg and hands bandaged being evacuated in a helicopter which had landed in the street.
Iraqi soldiers said the man, who was surrounded by security guards and troops, was the Polish ambassador.
They said other wounded people had been taken by vehicle to the Green Zone for treatment.
Poland backed the US-led invasion of Iraq in 2003 which toppled Saddam Hussein, then Iraqi president, and currently has about 900 troops in the country.
A number of diplomats have been killed in Baghdad since the invasion began.
Last year four Russian diplomats were abducted and killed and in 2005 fighters said they had killed Ihab el-Sherif, the Egyptian mission chief.
In the same year, Bahrain's envoy was also shot and wounded when fighters opened fire on his car.