Shi'ite militias allegedly massacred 77 Sunni villagers while Iraqi security forces did nothing during an offensive to expel Islamic State (Isis) jihadists from the Diyala province, north of Baghdad, which is one of the last IS held areas in the province.
Survivors said the onslaught could threaten to undermine the the government's fight against the Sunni Islamic extremists who have taken control of swathes of the country.
Prime Minister Haider al-Abadi has ordered an urgent investigation into the violence, which has been denied by military officials, AFP reports.
Shi'ite militiamen reportedly entered Barwana on Monday (26 January) and allegedly selected young men after checking their IDs before lining them up to be shot.
"Cars filled with men carrying mostly light weapons entered the village. They gathered all the people in one place, including some children," said Nahda al-Daini, a lawmaker from Diyala.
"They executed 77 of them," she told AFP. "It was Shi'ite militia forces who carried out this massacre with cover from the [Iraqi] security forces."
Lieutenant general Abdulamir al-Zaidi, the officer who commanded army operations in the Moqdadiyah area, denied the allegations.
"Not a bullet was shot in Barwana," he told AFP, adding that 70 Iraqi forces were killed and at least twice that number of IS jihadists in the Diyala operation.
The prime minister has ordered an investigation into the matter," his spokesman Rafid Jaboori told AFP.
UN envoy Nickolay Mladenov welcomed the probe and said: "It is the responsibility of the government to ensure that all armed forces are under its control, that rule of law is respected and civilians are protected in all areas of the country, including those areas recently liberated from IS."