The Iraqi parliament has passed a law which paves the way for provincial elections.
The decision brings to an end months of debate over how the law would be applied to the oil-rich city of Kirkuk.
The law was passed unanimously but must now go before the country’s three-man presidency council, headed by President Jalal Talabani.
Agreement over the drafting of the laws has been seen as a key part of political reform in Iraq.
One member of parliament told the BBC the agreement was a sign of national reconciliation.
The head of the Iraqi parliament’s legal committee, Bahaa al-Araji, told reporters that a compromise deal had been reached on Kirkuk.
“We tell our brothers in the south, the centre of Iraq and Kurdistan that this is an achievement by parliament,” he said.
“The elections will be soon, so the people of Iraq can put forward their votes to select new local government.”
Correspondents say provincial elections are part of an American-backed plan to reconcile rival groups, particularly the Sunnis, who boycotted the last round of provincial elections in 2005.
Mr Mashadani said the deal was what the Iraqi people wanted
Control of Kirkuk is disputed between Iraqi Arabs, Kurds and ethnic Turkmen, and disagreements over how to treat the city held up debate in parliament.
Iraqi Kurds believe they should control the city, which has a Kurdish majority but which lies outside their semi-autonomous northern enclave.
They believe any deal should reflect what they say was the “artificial Arabisation” of the city under Saddam Hussein.
But Kirkuk’s ethnic Arabs and Turkmen say it should be under the control of the central government.
Parliament adopted a draft provincial election law in July, despite a boycott by Kurdish and some Shia Muslim MPs, but it was rejected by the presidential council.
Polls had been scheduled for October this year, but were cancelled after MPs failed to reach an agreement.
Mahmoud Mashhadani, speaker of the Iraqi parliament, said the new deal was “what the Iraqi people want” and had been “written for them by the Iraqi politicians”.
Parliament has now set a deadline of 31 January 2009 for elections to be held in 14 of Iraq’s 18 provinces.
However, that excludes Kirkuk and three other Kurdish provinces, which will hold elections at a later date, reports say.
The BBC’s Hugh Sykes in Baghdad says that the low level of registration on the electoral roll prior to the earlier cancelled polls suggests a deep level of apathy among voters.
Many people wonder what the point is of turning out to vote when they still have to endure limited electricity supplies, high unemployment and poor facilities, says our correspondent.