People started vomiting and some fainted after eating the fast-breaking iftar meal on Monday, lawmaker Zahed Khatoun, a member of the Iraqi parliament's committee for displaced people told Reuters news agency on Tuesday.
Iraq's health minister told The Associated Press that a girl and woman died and more than 750 people were affected.
The food was provided by a non-governmental organisation.
Authorities have launched a formal investigation into the incident, officials said.
The Kurdish news agency Rudaw, citing Erbil's mayor, said the owner of the restaurant that made the food had been arrested.
The camp is located in al-Khazer on the road linking Mosul and Erbil and houses those displaced due to the ongoing offensive to retake Mosul from the Islamic State of Iraq and the Levant (ISIL, also known as ISIS).
According to the UN refugee agency, more than 6,000 people currently live inside the camp.
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