Britain today welcomed the passage of a much-delayed elections law through Iraq’s Parliament following months of political wrangling.

The move paves the way for provincial ballots before the end of January, seen as a key tool to heal sectarian rifts. But the thorniest element of the legislation – control of the oil-rich city of Kirkuk – was taken out, to be resolved at a later date.

David Miliband, the Foreign Secretary, said: "The passing of Iraq's new electoral law... is welcome and important.”

He added: "When the time comes to vote I am sure that the Iraqi people will once again embrace the democratic political process as they did in 2005."

Iraqi MPs finally passed the law unanimously yesterday to the delight of the United Nations, which has been working around the clock to hammer out a text that Iraq’s majority Arabs and minority Kurds could all sign up to.

The United States also applauded the long-awaited move, which will enable local elections for provincial councils to take place across the country, apart from in Tamim, where Kirkuk is the capital. They will mark the first elections in almost four years and will give the clearest indication yet of different parties’ strength before a general election next year.

Progress on the political front is seen as vital to lock-in security gains in recent months that have pushed violence down to its lowest level in four years.

But the fragile nature of the new-found security was again demonstrated yesterday when gunmen killed 35 people, including 27 policemen, in an ambush northeast of Baghdad. A US soldier was also killed by a suicide bomber in a separate incident in Diyala province.

Staffan de Mistura, the UN special representative to Iraq, congratulated lawmakers for reaching a compromise on Kirkuk.

"The Iraqi people will now have a chance to express their own opinion and their own vote about who is going to lead them at the provincial level," he said.

The legislation should have been approved over the summer to allow elections by October but this plan was derailed by tensions over Kirkuk. Kurds, Arabs and Turkmen have conflicting claims on the city, resulting in a potentially explosive dispute over power-sharing.

Iraq’s 275-member Parliament agreed to establish a committee to examine the issue with a view to holding separate elections in the province by March.

A three-member presidency council, headed by Jalal Talabani, the Iraqi President, must now approve the law. Mr Talabani, a Kurd, rejected an earlier version in July but the passage of the latest draft should be just a formality.

Time is fast running out for the bulk of the polls to take place by the end of January, however. Faraj al-Haidari, head of the Iraqi Electoral Commission, said that it might be four to five months before the vote could go ahead.

People on the street were largely enthusiastic about a chance to choose new local political leaders.

Many Sunni Arab parties shunned the last provincial elections in 2005 because they did not support the Government. This time around, they are more prepared to take part. Shia Arab parties, who represent the majority of Iraq’s ethnically diverse population, are also looking forward to strengthening their political grip.

Mohammed Hafoth, a Sunni Arab from the restive northern city of Mosul, said that political change was necessary, provided that the elections were open and fair.

“If the elections are held honestly all over Iraq and do not involve sectarian parties then they will be for the good of Iraq and the Iraqis,” said the teacher, who is in his 50s.

In Najaf, a holy Shia city south of Baghdad, there was a mood of optimism.

“It is good at last that Parliament has approved the election law,” Ahammed Fathel, a 39-year-old teacher, said. “It will give the provinces a greater ability to reconstruct and control the cities.”

The atmosphere was not so positive in Kirkuk, however, where some people felt cheated at being made to wait longer than the rest of the country for the ballot.

“Parliament failed to resolve the Kirkuk problem,” said Sherwan Baban Hajar, a 41-year-old Kurdish trader in the city.

“Lawmakers approved the law without Kirkuk to run away from the problem … All the people of Kirkuk are disappointed not just the Kurds because we are suffering together and we are looking for a resolution from the Parliament.”

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