The clergy-backed Shia United Iraqi Alliance has been officially declared the winner of the Iraqi general election, taking 140 seats of the new 275 seat National Assembly.

The Kurdish parties came second with 75 seats and the party of the interim Prime Minister Iyad Allawi, a secular Shia with a pro Washington stance, took 40 seats.

The Assembly will now choose a president and two vice-presidents, who in turn pick a prime minister and cabinet. The new government will be in power for ten months and is charged with drafting a new constitution.

Carlos Valenzuela, the chief United Nations election expert in Iraq, said the elections results exceeded his expectations and added: "The elections were not perfect, they were never meant to be, but they were extremely good elections."

The United Iraqi Alliance will be forced to form coalitions with other parties to govern, as a two-thirds majority of delegates is needed to pass legislation in the new parliament.

Top Shia politicians have agreed to choose their nominee for prime minister through a secret ballot. It is expected to take place on Friday and commentators believe it will be a two-man race between Ibrahim al-Jaafari and Ahmad Chalabi.

The contrast between the two candidates reflects a division within the clergy-endorsed alliance, which is made up of ten major political parties and various allied smaller groups.

Mr al-Jaafari, 58, is the leader of the religious Dawa Party, one of Iraq's oldest parties, known for its popularity and close ties to Iran. He is a moderate but his party's platform is conservative.

Mr Chalabi, also 58, who left Iraq as a teenager, leads the Iraqi National Congress and had close ties to the Pentagon before falling out of favour last year after claims he passed intelligence information to Iran. A secular Shia, Mr Chalabi's Iraqi National Congress is an umbrella for groups that included Iraqi exiles, Kurds and Shia.

Kurdish parties have agreed to support the alliance's candidate for prime minister in return for the largely ceremonial presidency. But officials said they would not accept a theocratic government.

Fifty-eight per cent of registered voters, 8.456 million people, turned out for the vote. But Sunni Arabs, favoured under Saddam Hussein's rule, largely stayed away from the polling booths.

The leading Shia party must move cautiously if they want to form an inclusive government, because the future administration will face the tough and immediate challenge of quelling violent insurgency, which is largely being waged by Sunni extremists.

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