Iraq is studying projects proposed by US and Russian firms to turn Saddam Hussein's palace near the site of ancient Babylon into a tourist site with a casino.

Saleh al-Muslimawi, governor of the Babil province 85km south of Baghdad, is reported as saying that the projects also entailed the restoration of museums in Babylon. He declined to give the companies’ names.

The lavish hill-top palace that belonged to former dictator Saddam Hussein - who was executed by hanging in December 2006 - overlooks the ruins of Babylon and the Euphrates River.

Iraqi historians and archaeologists have opposed any investment projects in the area as potentially damaging to the historical sites.