Originally it was said that 11 Iraqis had died but the government now says Blackwater guards killed 17 people.
Iraqi investigators also said that the Blackwater men did not come under fire.
Blackwater has not responded to the latest allegations, but has disputed previous accusations that its staff were the first to open fire.
But an Iraqi government spokesman said that the actions of the Blackwater employees amounted to deliberate killing.
"The investigation committee appointed by Prime Minister Nuri al-Maliki... has found that there was no evidence that the convoy of Blackwater came under fire directly or indirectly," spokesman Ali al-Dabbagh said on Sunday.
"It was not hit even by a stone," he added.
| | BLACKWATER USA FACTS Founded in 1997 by a former US Navy Seal Headquarters in North Carolina One of at least 28 private security companies in Iraq Employs 744 US citizens, 231 third-country nationals, and 12 Iraqis to protect US state department in Iraq Provided protection for former CPA head Paul Bremer Four employees killed by mob in Falluja in March 2004 |
Mr al-Dabbagh said that the Iraqi cabinet would look at the investigative committee's recommendations and "take legal steps to hold the company to account."
The report concludes that those involved should face trial.
The committee found that 23 people had been wounded in the 16 September shooting, when Blackwater employees opened fire on civilians at al-Nisoor square in Baghdad.
Blackwater's founder Erik Prince has insisted his firm's personnel acted in self-defence after insurgents attacked the US diplomatic convoy they were protecting.
Blackwater is the main firm employed by the state department to provide security for its staff and visiting officials and businessmen.
The US state department has handed its inquiry into the shooting over to the FBI.
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