Washington is holding up the formation of a new Iraqi government by insisting the two main election winners form a coalition, allowing Iraq's neighbours to meddle in its affairs, a top Shi'ite politician told Reuters.

Hadi al-Amiri, a parliamentarian who heads the Badr Organisation, the former armed wing of the Supreme Islamic Iraqi Council's (ISCI), said the United States was pressuring Iraqi leaders to form a government of the two main electoral blocs led by Prime Minister Nuri al-Maliki and former Premier Iyad Allawi.

He said Washington wanted to exclude others, including the Badr group, which won 11 seats in parliament.

"The Americans think that the best coalition is between Maliki and Allawi ... and in this way they exclude (people who they view as) extremists such as the Sadrists, Badrists and others," Amiri told Reuters in an interview.

"The insistence of the Americans on their project is what is delaying forming the government," he said at the ISCI's compound in Baghdad, which is guarded by uniformed Badr guards.

"Today, it's the Americans who are standing against (Iraq's government formation) project, not the Saudis, not the Syrians and not the Iranians. Regional interference comes when there is persistence by the Americans."

Iraqi political parties have been deadlocked since an election on March 7 which produced no outright winner.

Shi'ite, Sunni and Kurdish factions have been negotiating to form a parliamentary majority but they are unable to agree on who will hold the highest offices.

US President Barack Obama pressed Iraqi leaders last week to end the post-election deadlock and form a government soon since the reduction of US troops in Iraq was running ahead of schedule.

Talks forming a coalition have failed to make progress because of discord among the main Shi'ite coalition, made up of Maliki's State of Law bloc (SOL) and the Iraqi National Alliance (INA), about Maliki's desire for a second term.

Together the merged Shi'ite coalition has 159 seats in the new 325-seat parliament, four short of a majority.

Main stumbling block

Amiri's ISCI and the Sadrist political movement -- followers of anti-American cleric Moqtada al-Sadr -- are the INA's two main factions. Sadrists are known to oppose Maliki after he sent the Iraqi army to crush their Mehdi Army militia in 2008.

Allawi's Sunni-backed secular bloc, which won the most votes, has been unable to entice others into its camp. Both Maliki and Allawi want the job of prime minister, which remains the main stumbling block in the negotiations.

Amiri, 56, whose powerful group fought Sunni dictator Saddam Hussein from exile in Iran, said the only way to end the stalemate was to stop foreign intervention and choose a new candidate for a prime minister.

"The solution today is to bring someone who there is no stance against, meaning another person who is not Maliki and who is not Allawi," he said.

"Today, bringing either one will divide the street. Bringing Allawi will make 159 Shi'ites against him in parliament, and bringing Maliki will make 100 Sunnis in parliament against him."

Amiri said there was "a unified position" inside the INA not to back Maliki for another term and the INA had asked Maliki's State of Law to nominate another candidate from its bloc.

"How can we go to the parliament and half of the alliance rejects Maliki?" he said. "We told them (SOL) we reject Maliki's nomination and the ball is in your court."

Allawi's Iraqiya bloc won 91 seats in the election on strong backing from Sunnis who view Allawi, despite his Shi'ite background, as a secular and strong leader who would counter Iranian influence. Shi'ites regard him with scepticism as a front man for Sunni adherents of Saddam's outlawed Baath party.

Overall violence in Iraq has dropped sharply in the past two years but Sunni Islamist insurgents seeking to reignite the sectarian bloodshed that peaked in 2006 and 2007 have claimed responsibility for a series of bombings since the March vote.

However, minority Sunnis could react angrily if Allawi and Iraqiya were pushed aside in the government negotiations, reinvigorating a wounded but still lethal insurgency. – Reuters