Iraq's cabinet on Tuesday voted to remove the country's largest social welfare programme, a food distribution system, in favour of a direct cash transfer to citizens, a spokesman said.

The reform, due to come into force on March 1, would mean all Iraqis would be entitled to a 15,000 Iraqi dinar ($12.50) monthly payment in lieu of the current ration card system where families are entitled to claim basic items from local supermarkets.

The programme was implemented by now-executed dictator Saddam Hussein in response to the embargo and sanctions imposed on Iraq following his invasion of neighbouring Kuwait.

"The decision came after a two-year study, and the government reached the conclusion that the best way forward was to give cash to citizens," said Ali Mussawi, spokesman for Prime Minister Nuri al-Maliki, after a cabinet meeting.

"It is also the best way to combat corruption, and it can be carried out easily."

Government spokesman Ali al-Dabbagh said in a statement that, in addition to the cash transfer, authorities would also fix the price of flour, currently one of the main items that can be claimed as part of the ration card.

Mussawi said that the government currently spends around 12,000 dinars ($10) per person per month on the ration card programme, amounting to around seven percent of the Iraqi budget according to a UN report last year, more than either the health or education budgets.

But because of inefficiencies and corruption, only around 6,000 dinars' ($5) worth of food finds its way to Iraqis, according to Mussawi.

The UN report last year advocated reform of the ration card programme, Iraq's biggest social safety net, with the report describing it as "inefficient in several ways" and "vulnerable to theft and corruption".