Dhaka said Thursday it has resumed sending workers to Iraq after a three-month ban, despite reports of hundreds of Bangladeshi construction labourers being dragged into the country's bloody sectarian conflict.

Bangladesh suspended sending workers to Iraq in June after Sunni militants from the Islamic State began seizing large parts of the country from the Iraqi army.

Overseas employment secretary Showkat Hossain said the government had lifted the ban this week because the situation had improved.

"A small number of workers have gone to Iraq," he told AFP.

"The Iraqi government and our embassy in Baghdad have assured us that the situation has improved there. Besides, our people will work in areas far from the conflict zone."

Hundreds of Bangladeshi workers have returned home since the conflict began, some saying they suffered beatings and had their beards shaved off by Shiite Muslim troops after being accused of sympathising with Sunni insurgents.

All the labourers were working on construction projects for a South Korean company in the Bismayah region, south of Baghdad.

Hossain said the latest batch of workers would also be employed by a South Korean company, although he declined to give the name.

Migrant rights expert Tasneem Siddiqui criticised the move, saying it was irresponsible to send workers to Iraq at this time.

"We're sending them to a war zone," she told AFP. "Iraq is still very risky. There is no security for our workers."

Bangladesh had said last month it was "deeply concerned" over the crisis in Iraq and would keep the ban in force until the security situation improved.

Officials say around 20,000 Bangladeshis are living in Iraq, although the actual number is thought to be much higher.