The $8 million Emergency Social Protection Project is financed by the multi-donor Iraq Trust Fund administered by the bank.
The Washington-based bank says Iraq's current social safety net program is small and plagued by inefficiencies.
Bank officials say the Iraqi government is now expanding its program, spending $330 million each year to benefit up to one million families.
They say the Iraqi government program plans eventually to increase by six times the number of poor households that will receive social assistance.