The Iraqi Higher Committee for the Normalization of Kirkuk ruled that Arabs descended from those who moved to the city after 1957 would be returned to their original home towns and given compensation.
The decision will only apply to Arabs who arrived in Kirkuk during the "Arabisation" campaign of Saddam Hussein's government; a move that seems certain to anger the Arab settlers.
"Kirkuk is Iraqi land and it's for all Iraqis, I will never leave," Khalaf al -Housouni, an Arab who moved to Kirkuk in 1990, told Al Jazeera.
|Five suicide bombers staged attacks in |
Kirkuk at the weekend [AFP]
Human Rights Watch says that more than 120,000 Kurds, Turkomans and Assyrians were forcibly expelled from northern Iraq from 1991 and replaced by Arab families from mainly Shia regions of Iraq "to drastically alter the ethnic demographics of Kirkuk".
Since the US-led invasion of Iraq at least 300,000 Kurds have returned to the city that many of them believe should be part of autonomous Kurdistan.
"Kirkuk is part of the Kurdistan map. We have unfairly lost it, it was taken away by force," Ali Namir Saleh, a member of the Kirkuk governing council, said.
A referendum to decide whether the city will remain Iraqi or become part of Kurdistan is due to be held by the end of year.
|Thousands of Kurdish troops are already based in Kirkuk [REUTERS]|
Sheikh Abdul-Rahman Minshad al-Asi, head of the Arab Gathering party and a chief from the Obaid tribe, said that carrying out a census and referendum will guarantee that Kirkuk would be annexed to Iraq's Kurdistan region.
Kurds, Arabs, Turkomans and Assyrians have been living in the ethnically mixed city for centuries.
Kirkuk is vital to the future of Iraq because it sits on two per cent of the world's proven oil reserves.