The move comes just days after an investigation by the Iraqi government found that a shootout involving the company on the 16th of September left 17 dead.
Rice said Blackwater operatives in the country would now be accompanied by special agents from the US Bureau of Diplomatic Security.
“Additional agents are en route to Baghdad and we will continue to deploy agents to supplement existing assets,” said a statement on her department’s website.
Radio transmissions between American soldiers and the armed guards will also be recorded and the electronically-tracked movements of Blackwater patrols will be archived.
The announcement was made as the Bush administration tries to quell a growing rift with the Iraqi government over the incident, which is now the subject of several investigations.