The October 2012 agreement promised to make Russia into Iraq's second-largest arms supplier after the United States.
It also heralded Moscow's return to a lucrative Middle East market it dominated in the Soviet era but where it suffered more recent reverses with the loss of allies in countries such as Libya.
But Iraqi officials announced at the start of the year that Baghdad had cancelled the contract due to corruption allegations that were not spelt out.
Iraqi Prime Minister Nuri al-Maliki's top media adviser said Thursday that Baghdad had ultimately decided to keep the agreement with Moscow after conducting a review.
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"We really did have suspicions about this contract," the Iraqi government's media adviser Ali al-Musawi told Russia's RT state-run broadcaster.
"But in the end the deal was signed. We have currently started the process of implementing one of the stages of this contract," Musawi said without providing further details.
Moscow media reports at the time of the deal's signing said it involved 30 Mi-28 attack helicopters and 42 Pantsir-S1 surface-to-air missile systems.
Further discussions were reportedly also held about Iraq's eventual acquisition of MiG-29 jets and heavy armoured vehicles along with other weaponry.
Musawi said Iraq was primarily interested in acquiring helicopters that could be used by the military to hunt down suspected rebels staging attacks across the war-torn country.