Brigadier-General Abdul-Karim Khalaf, interior minister spokesman, said most refugees were returning from Syria.
Syria has the highest number of Iraqi refugees in the region and says their influx has strained its education, health and housing systems, pushing the government to tighten visa requirements and to call for international assistance.
'Exile is hard'
"Our families called us and told us the situation has improved in Baghdad, so we decided to come back," Lamia, a woman who had been living abroad for two years, told Reuters news agency.
"It is better than living in exile. Exile is hard."
"Iraq is still under foreign occupation and Iraqis continue to die in great numbers"
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Sultan said that many people who had returned had found that others had occupied their houses while they were away.
He said that his ministry was co-ordinating with the leaders of a joint US-Iraqi security operation in Baghdad to help the refugees get their homes back.
The government was also planning to set up a centre to offer poor returning families loans to set up small businesses and prepare them to "integrate with others" after their lengthy absence, Sultan said.
The government has been keen to highlight the number of families coming back to show that the nine-month security crackdown in the Iraqi capital is working.
In October the number of civilian deaths fell to 758 compared to 884 in September.
The US military says the number of attacks has fallen 55 per cent since the deployment of an extra 30,000 US troops in Iraq was completed in mid-June. Free trips
An Iraqi diplomat in the Syrian capital Damascus told the Associated Press news agency that free convoys and even airplane tickets were being provided to help returnees.
The first free trips were scheduled for Monday, when a convoy of buses and an Iraqi Airways flight will leave for Iraq, Adnan al-Shourifi, the commercial secretary at the Iraqi embassy, said.
Hundreds of people are already arriving back in the capital on buses from Syria every day.
"We are happy, very happy, we didn't even sleep since last night because of excitement," one man told Al Jazeera as he returned to Baghdad.
"Thank God we came back."
The International Organisation for Migration (IOM) said that many Iraqi refugees were waiting to make sure that the downturn in violence is not simply a lull but a "long-term phenomenon".