The Food and Agriculture Organisation of the United Nations will use the technology for the first time in a bid to support 12,000 conflict-affected people in 30 villages in former Isis enclaves.
The move will enable local farmers to return to the fields with rehabilitated infrastructure, providing agricultural livelihoods in previously overrun areas.
They will be paid individually to do so, using their mobile phones, a security code and a network of money transfer agents.
Once they complete a certain number of days of work, participants receive a text message with the personalised code, which allows them to their collect wages.
The FAO has partnered with regional mobile operator Zain, which pre-registers the names and identity numbers of participants, who receive a free SIM card.
"As well as providing much-needed income for participants, the programme will improve agricultural production in the surrounding communities, through activities including rehabilitating canals for irrigation to grow crops and preparing farmland for planting," said Fadel El-Zubi, the FAO’s representative in Iraq.
"This, in turn, will encourage community members still displaced by conflict to return home and begin farming again. The FAO's aim is to support people to get back on their feet as quickly as possible, and reduce their reliance on food assistance."
Some 12m Iraqis live in rural areas and depend on agriculture for their livelihoods. Years of conflict have damaged or destroyed harvests, equipment and infrastructure. Livestock, seeds, crops and food stores have also been hit, leaving 3.2m Iraqis with little food security.
According to data from mid-July, more than 3.3m people remained displaced within Iraq, while 2m have returned home.
As the government retakes control of more parts of the country, a major effort is needed to rehabilitate critical infrastructure so that agricultural production can resume, the FAO said.
The cash-for-work programme’s participants, who have no other income source, either remained in their villages during conflict or returned home after being displaced by the fighting.
"The use of mobile technology will streamline the safe delivery of cash transfers to participants, who are some of the most vulnerable people in the country," said El-Zubi.
"Providing income opportunities is critical in rural areas affected by conflict, where competition for employment is high, jobs are scarce and people are struggling to support their families."