THE Iraqi Government will announce a sweeping peace plan as early as Sunday in a last-ditch effort to end the Sunni insurgency that has taken the country to the brink of civil war.

The 28-point package for national reconciliation will offer Iraqi resistance groups inclusion in the political process and an amnesty for their prisoners if they renounce violence and lay down their arms, The Times can reveal.

The Government will promise a finite, UN-approved timeline for the withdrawal of all foreign troops from Iraq; a halt to US operations against insurgent strongholds; an end to human rights violations, including those by coalition troops; and compensation for victims of attacks by terrorists or Iraqi and coalition forces.

It will pledge to take action against Shia militias and death squads. It will also offer to review the process of “de-Baathification” and financial compensation for the thousands of Sunnis who were purged from senior jobs in the Armed Forces and Civil Service after the fall of Saddam Hussein.

The deal, which has been seen by The Times, aims to divide Iraqi insurgents from foreign fighters linked to al-Qaeda. It builds on months of secret talks involving Jalal al-Talabani, the Iraqi President, Zalmay Khalilzad, the US Ambassador, and seven Sunni insurgent groups.

Mr al-Talabani told The Times that after a “summit” in Baghdad about a month ago the groups made clear their willingness to commence talks with the Iraqi Government, although he was awaiting a formal response.

But one big potential obstacle is whether the US would be willing to grant an amnesty to insurgents who have killed US soldiers but who are not members of extreme groups such as al-Qaeda. The Bush Administration is thought to be split on the issue.

“This is very hard for us, particularly at a time when American servicemen are facing prosecution for alleged war crimes — and others are being captured and tortured,” a senior US official said.

With 2,500 US soldiers having died in Iraq, to grant an amnesty would be a “huge political football” before the November mid-term elections in the US, he said. But he added: “This is what we did after the Second World War, after the Civil War, after the War of Independence. It may be unpalatable and unsavoury but it is how wars end.”

The Government intends to form a committee to distinguish between groups that can be considered legitimate resistance and those that are beyond the pale. “For those that defended their country against foreign troops, we need to open a new page . . . They did not mean to destabilise Iraq. They were defending Iraqi soil,” said Adnan Ali, a senior member of the Dawa party of Nouri alMaliki, the Prime Minister.

Reading directly from the draft package, Mahmoud al-Mashaadani, the Parliament’s Sunni Speaker, told The Times: “There will be a general amnesty to release all the prisoners who were not involved in the shedding of innocent Iraqis’ blood.” Neither the Iraqi Government nor the US Embassy would name the insurgent groups involved in the discussions.

But Mr Talabani said that after the last meeting the groups went away to agree their position. He had since received “a message from a common friend that they are ready to discuss finalising an agreement with the United States and the Iraqi Government”.

Mr Khalilzad recently told The Times that reconciliation required “a comprehensive strategy that has political elements, that has security elements, and that has reintegration elements in it: decommissioning, demobilisation, and reintegration of these forces.”

The draft marks the first time the Iraqi Government has endorsed a fixed timeline for the withdrawal of coalition forces from Iraq, a key demand of the Sunni insurgency.

“We must agree on a timed schedule to pull out the troops from Iraq, while at the same time building up the Iraqi forces that will guarantee Iraqi security and this must be supported by a United Nations Security Council decision,” the document reads.

One insurgent group involved in the discussions told The Times that the timetable for withdrawing foreign troops was key. “We are not against the formation of the new Iraqi goverment, but with certain conditions, which are to put a timetable for the pullout of US Troops," Abu Fatma, from the Islamic National Front for Liberation of Iraq, said.

Adopting a carrot-and-stick approach, Mr Khalilzad and Mr Talabani have also used the threat of Iranian influence in Iraq to persuade the rebels to come on board.

“I have said to the Sunnis, they complain to me about Iran, but some of the things they are doing in terms of their fight and the insurgency is serving Iranian interests,” Mr Khalilzad said.

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