Defence Force Chief, General Peter Cosgrove, has ordered Australian soldiers who are moonlighting as civilian contractors in Iraq to leave the country.
The order also forbids any soldiers considering going there to earn danger money while on annual or long-service leave from doing so.
Up to 20 soldiers are understood to be using their holidays and long-service leave to earn danger money in Iraq.
Soldiers can earn between $3000 and $7000 a week working for the Coalition or the Iraqi Government as civilian contractors in various jobs, from working as security guards to truck-driving.
General Cosgrove is concerned the only members of the ADF in Iraq should be those now serving as part of the official Australian contingent in the country.
Australia has about 920 soldiers posted in the Middle East, with about 300 in Iraq.
The complement includes a security detachment of 120 personnel, equipped with armoured fighting vehicles, and an explosive ordnance detachment to protect Australia's diplomats in Baghdad.
There are 15 technical experts serving with the Iraqi Survey Group and an Australian Army training team of 53 officers and soldiers in northern Iraq.
A further six air traffic controllers are at Balad Air Base near Baghdad.
The work ban follows a previous directive issued in 2003 for commanders not to approve any leave for military personnel wanting to travel to countries subject to a severe travel advisory.
Iraq is among five countries where DFAT advises against all travel.
The list also includes Afghanistan, Burundi, Liberia and Somalia