The government will not send its own soldiers to protect the Swiss mission in the Iraqi capital, Baghdad.
The cabinet said such a move could be misunderstood by Iraqis and leave its diplomatic staff and their guards vulnerable to attack.
In a statement, the government said the local population might be led to believe that Switzerland had taken sides in the United States-led conflict if Swiss soldiers were sent to protect the mission.
It added that soldiers could not in any case be sent to Iraq without the prior consent of parliament.
The government had been asked to consider sending Swiss soldiers to replace a private security force which is currently charged with guarding diplomatic staff in Baghdad.
Barbara Haering, who made the request as vice-president of a parliamentary security commission, said she regretted the fact that Switzerland was "delegating the risk to other countries".
The Swiss mission was reopened shortly after US-led forces declared an end to the war one year ago.
At the beginning of this year, the foreign ministry came in for criticism for awarding the SFr1.6 million ($1.3 million) security contract to a South African company, Meteoric Tactical Solutions (MTS).
MTS also provides protection for American officials and British development agencies, and trains Iraqi police.
However, the firm has yet to receive a licence to operate abroad, as required by South African law of all security firms.
MTS was in the spotlight earlier this year when two of its employees were jailed in Zimbabwe, accused of plotting a coup in Equatorial Guinea.
Defending its decision
The Swiss foreign ministry defended its decision to hire MTS, arguing that only a firm specialising in security in high-risk regions could do the job.
"The MTS employees are under the responsibility of our head of mission and we have never had any problems with them," said Foreign Minister Micheline Calmy-Rey in a recent interview with the Geneva-based "Le Temps" newspaper.
Haering had earlier called on the government to consider deploying Swiss soldiers.
“We would then have assurances that they are under democratic control and are trained to respect human rights,” she argued.
Swiss soldiers have been deployed in the past to protect the country’s embassies in the Algerian capital, Algiers, and in Moscow.
swissinfo with agencies
Switzerland is represented in Baghdad by a head of mission, chargé d’affaires and two development aid workers.
The Swiss mission is protected around the clock by a South African security firm.
The contract with the firm is worth SFr1.6 million.
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