A dramatic walk-out by a group of 60 MPs from the Sunni-backed bloc of former premier Iyad Allawi underscored the fragility of the deal, which seeks to finally end the country's political impasse eight months after elections.

As part of the accord, brokered during three days of intense talks, President Jalal Talabani, re-elected by MPs, named Maliki as prime minister on Thursday evening.

However, that was overshadowed by a dispute that prompted angry members of the Iraqiya bloc to storm out of the Council of Representatives chamber.

The support of Allawi's Iraqiya bloc, which narrowly won the March 7 poll and garnered most of its seats in Sunni areas, is seen as vital to preventing a resurgence of violence.

The Sunni Arab minority that dominated Saddam Hussein's regime was the bedrock of the anti-US insurgency after the 2003 invasion.

"Last night, it was clear, there are a lot of disagreements," independent Kurdish lawmaker Mahmud Othman told AFP on Friday.

"Last night showed that the agreement is shaky. Maybe it was signed behind closed doors, and when it came into the open, one side did not support it. If this means Iraqiya will not be participating in the government, that will create problems."

Senior Iraqiya MP Hassan Alawi, who did not walk out, told AFP he expected "the Iraqiya MPs (who left) will be back in parliament and the agreement will be approved" by parliament.

Thursday's session, only the second since the election, began optimistically with Maliki and Allawi sitting side-by-side in the parliament chamber.

But shortly after the selection as speaker of Osama al-Nujaifi, a Sunni Arab and Iraqiya member, verbal clashes erupted, with Iraqiya complaining that the power-sharing deal was not being honoured.

Specifically, it called for three of its top members, barred for their alleged ties to Saddam's Baath party, to be reinstated before voting for a president.

When their demands were not met, some 60 MPs left the chamber. After some confusion, the remaining MPs began voting to re-elect Talabani.

Maliki now has 30 days to form his cabinet, with the next parliamentary session scheduled for Saturday.

"We boycotted the session (on Thursday) because we showed good intentions to others, but they stabbed us in the back," Saleh al-Mutlak, part of the trio Iraqiya wanted reinstated, told AFP.

"We will not return without international guarantees," he added, without elaborating.

The power-sharing deal stipulated that a Sunni Arab hold the post of speaker, and that Talabani and Maliki retain their posts.

It also established a statutory body to oversee security as a sop to Allawi, who had held out for months to take back his old job.

Iraqiya has said its participation hinged on four conditions: a bill forming the security body, a committee examining cases against political detainees, codifying the power-sharing deal and annulling the bans on the three Iraqiya members.

Allawi has repeatedly accused Maliki of monopolising security decisions during his first term. As far back as six months ago, US officials floated the idea of a new counterweight to the power of the premier's office as a way of breaking the deadlock over the top job.

US President Barack Obama on Friday hailed the agreement as a "milestone" in Iraq's history.

The government will be "representative, inclusive and reflect the will of the Iraqi people," he said in Seoul, where he was attending the G20 summit, adding that Washington had long lobbied for such a "broad-based government."

In a telephone call, Obama congratulated Maliki "on the steps taken to form an Iraqi government, and underscored the importance of finalising a government that is broad-based, inclusive and reflects the will of the Iraqi people," the White House said.

The US military, which currently has fewer than 50,000 soldiers in Iraq, is due to withdraw all of its forces by the end of 2011.

British Foreign Secretary William Hague, whose country was a partner in the US-led invasion, called the deal a "significant step forward." France also lauded the accord, labelling it a "step in the right direction."

UN chief Ban Ki-moon said the deal was a "major step" and urged Iraq's leaders to "continue demonstrating the same spirit of partnership in moving swiftly to conclude the formation of a new government," his spokesman said.

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