(Reuters) - President Barack Obama Monday played down the use of U.S. drones in Iraq, saying the program was very limited and focused mainly on protecting the U.S. Embassy in Baghdad.

The program has outraged senior Iraqi officials, said The New York Times, which first reported the drone flights.

The State Department began operating some drones in Iraq last year on a trial basis and stepped up their use after the last U.S. troops left Iraq in December, the Times said.

The truth is we're not engaging in a bunch of drone attacks inside Iraq. There's some surveillance to make sure that our embassy compound is protected, Obama said during an online question-and-answer session with users of YouTube and Google+.

I think that there's this perception that we're just sending in a whole bunch of strikes willy nilly, Obama added. It is important for everybody to understand that this is kept on a very tight leash.

Victoria Nuland, a spokeswoman for the State Department, said its Bureau of Diplomatic Security had a program to use small aircraft known as unmanned aerial vehicles, or UAVs, to take pictures of U.S. facilities and personnel abroad.

The New York Times quoted a senior U.S. official as saying talks were under way to obtain authorization for the current drone operations in Iraq.

However, the newspaper reported that three senior Iraqi officials - a top adviser to Prime Minister Nouri al-Maliki, Iraq's national security adviser, and the acting minister of interior - said in interviews they had not been consulted.

Nuland declined to address whether the U.S. government had obtained Iraqi permission to fly the drones, saying only that it always closely consulted with foreign governments about steps to protect U.S. diplomats.

Asked how large the drones were, Nuland held her hands about 2 feet apart. A photograph in the Bureau of Diplomatic Security annual report showed a man holding one that appeared to be 4 or 5 feet long.

In addition to flying over facilities such as embassies, the drones can be used to track the routes and movements of U.S. diplomats as they travel within a country.

(Reporting By Arshad Mohammed, Caren Bohan and Samson Reiny; editing by Eric Beech and Mohammad Zargham)

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