Iraq's presidential council has agreed on a law that paves the way for U.S.-backed provincial elections to be held by the end of January.

Panel spokesman Nasser al-Ani told the Associated Press that the law has gained unanimous approval of the three-member panel and will be officially signed later Friday.

The panel, led by President Jalal Talabani, decided to approve the law on Monday but did not sign it due to Islamic holidays, al-Ani said.

The move is a breakthrough for U.S. efforts to promote national reconciliation after months of deadlock over power-sharing issues in northern Iraq and will allow preparations to go ahead for the first such elections in four years.

Iraqi legislators set aside the divisive issues of the oil-rich region around Kirkuk and representation of minorities.

"There is an effort to come up with an appendix regarding the minorities later on," al-Ani said.

Sunnis may benefit

U.S. officials hope the election, which must be held by Jan. 31 according to the new legislation, will give greater representation to minority Sunni Arabs and disaffected members of the Shia majority.

The 275-member Iraqi parliament had been heavily criticized for its inability to pass the law needed to establish the rules and guidelines for the vote. The election had been due as early as Oct. 1, then was pushed to the end of December.

Many Sunnis and some Shias boycotted the January 2005 provincial election, enabling Shia religious parties and the Kurds to win a disproportionate share of the seats.

U.S. officials hope that by empowering Sunnis through a new election they can reduce support for the insurgency.

Followers of anti-U.S. Shia cleric Muqtada al-Sadr are also hoping to make large gains in southern provinces, where many of the councils are dominated by rival Shiite parties in the ruling government coalition.