This was a fourth consecutive qualifying stalemate for Ange Postecoglou's side, who had won their opening two group games against Iraq and United Arab Emirates.
Despite defeat in the reverse fixture, Iraq were the better side this time around and were unfortunate to fall behind to a Mathew Leckie header after 39 minutes.
It looked as though the Socceroos would see out the second half and claim a crucial win, but substitute Ahmed Yasin deservedly levelled for the hosts 14 minutes from the end to earn a share of the spoils.
While Australia temporarily move level on points with second-placed Japan, having played a game more, this was a missed opportunity to keep up the pressure at the top as group leaders Saudi Arabia won 3-0 in Thailand.
Victory against UAE back in Sydney on Tuesday will now be crucial if the Socceroos are to secure a top-two spot and qualify automatically for the finals in Russia.
Iraq made the brighter start, with Ali Adnan cutting in from the left to fire over and Mohannad Abdul Raheem then forcing a smart stop from Mitchell Langerak.
Amjed Kalaf then lifted a finish over the crossbar and their profligacy proved costly as Australia took the lead through Leckie - after Jackson Irvine and Aaron Mooy had fired warning shots.
With six minutes of the half to play Leckie met Mooy's corner superbly and powered his head inside the left-hand post.
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