Iraq has recalled its ambassador to Jordan in a tit-for-tat move following Jordan's earlier decision to pull its envoy out of Baghdad.
Protesters raised the Iraqi flag over the Jordanian embassy
Jordan withdrew its charge d'affaires Damai Haddad saying that anti-Jordanian protests outside its Baghdad embassy had made it unsafe for him to remain.
Shia protesters say that Jordan had a role in a suicide bombing last month.
Now Iraq has pulled its envoy out of Amman for consultations, saying relations were "in crisis mode".
Protests were held outside the Jordanian embassy in Baghdad on Friday, and an Iraqi flag was raised over the building, while Jordanian flags were burnt.
Shia groups are angry after reports that the family of a Jordanian, Raed Mansour al-Banna, held celebrations after he carried out a suicide bombing which killed 125 people in Hillah, south of Baghdad, on 28 February.
Nearly all the victims of that attack were Shia police and army recruits.
The Jordanian flag was burnt during protests
However, al-Banna's family have now denied that he carried out the Hillah attack, saying only that he was responsible for a suicide attack somewhere in Iraq.
"Iraqis are feeling very bitter over what happened," Foreign Minister Hoshyar Zebari told the Associated Press.
"We decided, as the Iraqi government, to recall the Iraqi ambassador from Amman to discuss this."
For their part, the Jordanians have said their envoy will not return to Baghdad until his security can be assured.
"We are hoping that the Iraqi police will devise a plan to protect the embassy, " said Foreign Minister Hani al-Mulqi.
"In the meanwhile, we have asked the charge d'affaires to come back because he was living in the embassy," he said, adding that other embassy officials living elsewhere in Baghdad would remain in the Iraqi capital for the time being.