The chairman of Blackwater, the private US security firm at the centre of a major diplomatic row in Iraq, said yesterday he will not hand over any of his hired guns for trial in Baghdad.

Erik Prince, a former US Navy Seal commando, confirmed that 20 of his Blackwater guards were under investigation for their part in what witnesses claim was the indiscriminate shooting of at least 17 unarmed Iraqi civilians last month.

The US military is meanwhile pressing for jurisdiction over the tens of thousands of armed "security contractors" working as bodyguards and convoy escorts for the US government or major foreign companies inside the country.

Mr Prince said his men were being protected in a secure area within Baghdad's heavily-defended Green Zone and were carrying out light duties while their fate was determined.

The Iraqis have already demanded Blackwater and its 800 employees be expelled and that the firm pays up to £2m to the relatives of each of the civilians killed on September 16. Iraqi ministers are also calling for a public trial of the men.

Blackwater has been involved in 195 separate shooting incidents since 2005, but has enjoyed exemption from international laws because it is the US State Department's main contractor.

Robert Gates, the US Defence Secretary, has now intervened to try to bring the estimated 48,000 international mercenaries and specialists under US military rules.

Mr Prince said yesterday: "We will not let our people be taken by the Iraqis. In an ideal sense there could be a trial in the Iraqi court system. But that would imply there is a valid Iraqi legal system where Westerners could get a fair trial. That is not the case."