The IOC said the move violated Olympic rules on government intervention - and noted time was running out to try to salvage even a portion of the seven-member Olympic team for the games beginning Aug. 8.
Jazair al-Sahlani, spokesman for the Iraqi Olympic committee, said "high-level" talks had begun with IOC envoys and international mediators from Germany and China. He declined to give further details, but predicted a deal was within reach.
"We still have the hope the Iraqi flag will fly at the opening ceremony in Beijing," he said.
But Basil Abdul Mahdi, an adviser to the government's Ministry of Youth and Sport, said there would be "no retreat" in the decision to replace the Iraqi Olympic Committee.
The government claimed the old panel was corrupt and lacked legitimacy because it was missing too many members - including four members of the committee, including its chief, who were kidnapped two years ago. Their fates remain unknown.
An IOC spokeswoman, Emmanuelle Moreau, said the deadline to finalize athletic competitors was Wednesday and Iraq could field a partial team if the government reversed its decision.
That meant two members of Iraq's Olympic team - a discus thrower and a sprinter - could still make it into the Olympics. The door, however, was closed to the other five, said Moreau, speaking from IOC headquarters in Lausanne, Switzerland.
The others had planned to compete in weightlifting, judo, archery and rowing.
"We would like to see the Iraqi athletes compete in Beijing," said Moreau. "There is a slight opportunity for them provided the government stops interfering and reinstates the National Olympic Committee."
"The ball is in their court, really," she said.
The Iraqi refusal to compromise has angered athletes and risks aggravating Iraq's sectarian rifts. The Youth and Sports Ministry is dominated by Shiite Muslims who also control the government.
Iraq's Olympic Committee had included several holdovers from the Saddam era, when Sunni Arabs had the greatest role.
"I was training very hard to win and get medal in Beijing and hoist the Iraqi flag, but now my dreams had broken," said Swara Mohammed Berbal, a 26-year-old weightlifter training in the northern city of Irbil.
Iraq has only one medal - a bronze in weightlifting in 1960 - since its first appearance at the Summer Olympics in 1948.
Sarhang Abdul-Khalq, a member of the Olympic committee in Iraq's semiautonomous Kurdish region, said the "government has cut off the head of sports in Iraq."
