Earlier reports had erroneously identified the helicopters and personnel as American.
But defence secretary Des Browne was able to confirm that the soldiers involved were British after the families of those on board the helicopters were informed of the incident.
"Sadly, two personnel have died and one is very seriously injured. All of these were UK personnel," Mr Browne said.
"Initial reports indicate that the crash was an accident and was not a result of an attack by insurgents.
"An investigation is under way and I will not comment further on the details of the incident at this stage," the defence secretary added.
An MoD spokesperson has since clarified that the crashed helicopters are Pumas.
Although British troops are mostly based in the southern city of Basra, UK forces carry out operations across Iraq.
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