The Iraqi parliament has approved a security pact that allows U.S. troops to stay in the country for three more years.

Speaker Mahmoud al-Mashhadani said an "overwhelming majority" of lawmakers who attended the session voted in favour of the pact.

The United Nations mandate governing the presence of U.S. troops in Iraq was set to expire on Dec. 31. The new deal brings into sight an end to the U.S. military presence that began with the invasion in March 2003.

Under the security pact, U.S. forces will withdraw from Iraqi cities and village by June 30, 2009, and the entire country by Jan. 1, 2012. Iraq will have strict oversight over U.S. troops.

"We welcome today's approval by Iraq's council of representatives of the strategic framework and the security agreement. We look forward to ratification of this vote by Iraq's Presidency Council," a U.S. embassy spokesman said.

The pact was backed by the ruling coalitions of Shia and Kurdish blocs but opposed by supporters of controversial Shia cleric Moqtada al-Sadr and several Sunni parties.

But the largest Sunni bloc changed its position in exchange of concessions.

Before the vote, Salim Abdullah, the spokesman for the largest Sunni bloc in Parliament, said the agreement met his and other parties' demand that a nationwide referendum be held by July 30 in exchange for their support. That could result in the deal being approved by Parliament but torpedoed by a "no" vote in the referendum.

The security pact has been described by Iraqi Prime Minister Nouri al-Maliki as a path toward full sovereignty for Iraq.

The pact must still be ratified by the Presidential Council, whose three members each have veto power.

Parliamentary debate had been stalled by sectarian-based disputes. Iraq's Shias and Kurds, comprising about 80 per cent of the country's 27 million people, were targeted under Saddam Hussein's Sunni-dominated regime.

With files from Reuters and the Associated Press