WASHINGTON — The State Department may phase out or limit the use of private security guards in Iraq, which could mean canceling Blackwater USA’s contract or awarding it to another company in line with an Iraqi government demand.

Such steps would be difficult given American reliance on Blackwater and other contractors, but they are among options being studied during a comprehensive review of security in Iraq, two senior officials said.

The review was ordered after a September 16 incident in which Blackwater guards protecting an American Embassy convoy in Baghdad are accused of killing 17 Iraqi civilians.

The shooting has enraged the Iraqi government, which is demanding millions in compensation for the victims and removal of Blackwater in six months. It also has focused attention on the nebulous rules governing private guards and added to the Bush administration’s problems in managing the war in Iraq.

And it prompted Secretary of State Rice to order the top-to-bottom review from a commission headed by one of the State Department’s most experienced management officials, Patrick Kennedy.

Mr. Kennedy has been told to concentrate on several key issues, according to the officials, who spoke on condition of anonymity because the review is still under way. Among them:

— Changes to the rules of engagement under which State Department security contractors operate, particularly for approaching suspicious vehicles, which is at the crux of the September 16 incident. Blackwater insists its guards were fired upon, although Iraqi witnesses and the Iraqi government maintain the guards opened fire with no provocation when a vehicle got too close.

— Whether Blackwater’s secretive corporate culture, reputed to have encouraged a “cowboy-like mentality,” has led to its employees being more likely to violate or stretch the existing rules than those of the two other private security firms, Dyncorp and Triple Canopy, the State Department uses in Iraq.

— Whether it’s feasible to eliminate or drastically curtail the use of private foreign contractors to protect American diplomats in Iraq. And, if so, how to replace them.

The officials cautioned that no decisions have been made on what the review panel will recommend. They also said that each recommendation involves complex variables that could depend on interpretations of Iraqi and American laws, as well as American government regulations for vendors.

But they said Ms. Rice is eager for changes and has already accepted and implemented initial steps Mr. Kennedy urged in a preliminary report last week. They included improving government oversight of Blackwater by having federal agents accompany convoys and installing video cameras in their vehicles.

Mr. Kennedy has been in Iraq for nearly two weeks with one of three outside experts Ms. Rice named to the commission, Eric Boswell, a former diplomat and intelligence official. The other two, a retired Army General, George Joulwan, and a former Ambassador, Stapleton Roy, were being briefed on the mission at the State Department today before heading to Baghdad.