The number of foreign staff in Baghdad is being reduced to about 50 as the level of violence throughout the country has failed to abate and the organisation fears that US-led forces cannot ensure security.
"It's a very difficult decision. It's a heartbreaking decision for us to reduce our staff," Nada Doumani of the ICRC told the BBC.
"We believe these warnings are to be taken seriously... It's very depressing for the Iraqis to realise that after four months... they don't feel safe in their own country."
The Red Cross tends to stay put when everyone else goes, so its decision to reduce staff is likely to be followed by other agencies, the BBC's Susannah Price in Baghdad says.
Different organisations are reviewing their operations, following Tuesday's bombing of the United Nations compound in Baghdad, in which more than 20 people died.
Attacks against Iraqi civilians have also continued, with three killed and nine injured in an assassination attempt on leading Shia Muslim cleric Grand Ayatollah Seyed Mohammed Said al-Hakim in the Iraqi holy city of Najaf.
The cleric received only scratches in the blast at his office on Sunday afternoon but two of his bodyguards and a driver were killed.
Essential services
The Red Cross has suffered its own losses with the death of two workers.
The organisation said it would be forced to cut services further if the threat to its staff remained.
The ICRC in Baghdad is involved in a number of key operations which include:
* Supplying hospitals with medical equipment and drugs
* Visiting those detained by the American forces
* Helping families trace missing relatives
* Supplying the only hospital in Baghdad for the mentally ill
The UN, which lost its top envoy Sergio Vieira de Mello in the Baghdad compound blast, has sent non-essential administrative staff out of the country.
In another development on Sunday, medical personnel working for Spain's Movement for Peace, Disarmament and Liberty returned from Iraq.
"Baghdad is a lawless city," said Doctor Gabriel Espana on arrival in Madrid. «MORE...»
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