US Secretary of State Condoleezza Rice has ordered tighter controls over the operations of US security contractors in Iraq - including Blackwater USA.
Blackwater provides security to US diplomatic staff in Baghdad
The move follows a state department inquiry into the role of Blackwater personnel in the fatal shooting of 11 Iraqi civilians in Baghdad last month.
The measures include fixing cameras on convoys protecting US diplomatic staff.
Diplomatic security agents will also be sent to Iraq to oversee operations, and communication with US troops improved.
Ms Rice ordered "actions to improve operational accountability and control" of operations, after receiving an initial report by a panel she sent to Iraq to investigate the 16 September incident involving Blackwater.
Special agents would begin immediately accompanying convoys taking diplomatic staff outside Baghdad's heavily fortified Green Zone, said state department spokesman Sean McCormack.
Video cameras and other recording devices would be fixed to vehicles to improve monitoring of their activities and record communications between diplomatic convoys, he said.
Iraq has accused Blackwater's employees of opening fire on civilians at al-Nisoor square in Baghdad without provocation, a charge the firm denies.
BLACKWATER USA FACTS
Founded in 1997 by a former US Navy Seal
Headquarters in North Carolina
One of at least 28 private security companies in Iraq
Employs 744 US citizens, 231 third-country nationals, and 12 Iraqis to protect US state department in Iraq
Provided protection for former CPA head Paul Bremer
Four employees killed in Falluja in March 2004
Blackwater's founder Erik Prince has insisted his firm's personnel acted in self-defence after insurgents attacked the US diplomatic convoy they were protecting.
On Thursday, the state department handed over its inquiry to the FBI.
It said the shift was in preparation for the possibility that the case could be later referred to the US justice department or Iraqi authorities for further action.
In a separate development, the US House of Representatives passed a bill that would make all private contractors working for the US government subject to US laws.
Blackwater has earned more than $1bn (£490m) from US government contracts since 2001.