The Iranian exiles have been living in Iraq for nearly 20 years
Iraq has said that several thousand opposition Iranians living in exile must leave the country.
The exiles include members of the opposition organisation the People's Mujahideen of Iran (PMOI), considered a terrorist group by the US and the EU.
The PMOI has renounced armed action and reportedly disarmed but Tehran has demanded their expulsion from Iraq.
Baghdad said they must return to Iran or go elsewhere. The Iranians fear they will be executed if they go home.
The nearly 3,500 Iranian exiles were given the news in a visit by Iraqi National Security Advisor Mowaffaq al-Rubaie to Camp Ashraf, north of Baghdad, where they have been living for two decades.
"The Iraqi government is responsible for their security and it continues to implement its plans to shut down the camp and to either deport its population to their country or to a third country," the government said in a statement after the delegation's visit.
"Remaining in Iraq is not an option for them."
Iraqi Prime Minister Nouri Maliki is due to make his fourth visit to Iran later this week and his Shia-led government has cultivated friendly ties with Tehran.
It is not the first time Iraq has promised to expel the Iranians. In December 2003, the US-appointed Governing Council said the PMOI would have to leave but the order was never carried out.
The PMOI formed in 1965 with the aim of toppling the Shah of Iran. The group fell out with Iran's religious leaders after the revolution of 1979 and gained sanctuary in Iraq under Saddam Hussein.
During the Iran-Iraq war of 1980-88, PMOI members carried out cross-border raids into Iran.
The group renounced armed action in 2001 and, after the US-led invasion of Iraq, Camp Ashraf fell under US protection.
The PMOI then gave up many weapons, including tanks and armoured personnel carriers.