The forum concluded with an agreement to meet again in 10 days, a senior U.S. government official said.
As CBS News Correspondent Mark Phillips reports, thirteen points were agreed as a basis for a new government. Among them: that it should be democratic, its leaders should be chosen by Iraqis and not imposed from outside and that Saddam Hussein's Ba'ath Party should be dissolved and have no future role.
Retired Lt. Gen. Jay Garner opened the conference, held under a golden tent next to the famous ziggurat ruins. White House envoy Zalmay Khalilizad told delegates that the United States has "no interest, absolutely no interest, in ruling Iraq."
Thousands of Shiite Muslims whose representatives boycotted the meeting demonstrated in nearby Nasariyah against the gathering. Marchers chanted "No to America and no to Saddam!"
The meeting took place at Tallil air base. The participants included Kurds, Sunni and Shiite Muslims from inside the country as well as others who have spent many years in exile. U.S. officials issued invitations to the groups, but each picked their own representatives.
Many Iraqis said they would boycott the meeting and opposed U.S. plans to install Garner as head of an interim administration.
"Iraq needs an Iraqi interim government. Anything other than this tramples the rights of the Iraqi people and will be a return to the era of colonization," said Abdul Aziz Hakim, a leader of the largest Iraqi Shiite group, the Supreme Council for Islamic Revolution in Iraq.
But according to the United States, Garner's job to cobble together a working administrative arrangement. A successful meeting, he said would be a fine way to celebrate his 65th birthday.
"What better birthday can a man have than begin it not only where civilization began, but where a free Iraq and a democratic Iraq will begin today," Garner said.
"We have our reservations against attending a meeting called for by a military side," said Ibrahim al-Jaafari, one of the leaders of al-Daawa (the Call) Party, an influential Shiite group not allied with Iran. He said he was invited to the meeting.
"We don't know the exact aim of the meeting," he said in Tehran.
U.S. officials hope more Iraqis join the process over time.
"It's critical that the world understand that this is only the fledgling first meeting of what will hopefully be a much larger series of meetings across Iraq," said Jim Wilkinson, spokesman at U.S. Central Command.
A national conference is planned ultimately to select the interim administration, perhaps within weeks, said a senior U.S. official, speaking on condition of anonymity.
The U.S.-led interim administration could begin handing power back to Iraqi officials within three to six months, but forming a government will take longer, said Maj. Gen. Tim Cross, the top British member of Garner's team.
"Will we get a complete government in place in that time? I doubt it," Cross said. "One has to go through the process of building from the bottom up, allowing the leadership to establish itself, and then the election process to go through and so forth. That full electoral process may well take longer."
Garner's Office of Reconstruction and Humanitarian Assistance is charged with rebuilding infrastructure shattered by years of war and U.N. sanctions, and gradually handing back power to Iraqis leading a democratically elected government.
Tuesday's meeting is the first step toward that goal after the ouster of Saddam.
About 100 Iraqis were expected at Tuesday's meeting, half from inside Iraq, half exiles. Khalilzad, the White House envoy to Iraq, was the moderator. Representatives from Britain, Australia and Poland — countries that contributed forces to the coalition — also attended.
Wilkinson stressed that the meeting was an "unscripted, free-flowing forum of ideas" designed to get Iraqis talking about what they want for the future. According to the Washington Post, even Saddam Hussein's Baath Party would not be barred from the meetings.
But there are already tensions between the United States and some of the Iraqi factions.
Kurdish groups appear unwilling to compromise on their demand to expand the border of their autonomous area to include the oil-rich city of Kirkuk and the Kurdish parts of Mosul.
That could pose a problem for the United States, because Turkey worries that Kurdish control of Kirkuk could lead one day to aspirations for independence, which could also encourage separatist Kurds in Turkey.
Iraqi opposition leaders, meanwhile, fear the U.S. administration is using the meeting to try to force Ahmed Chalabi, head of the London-based umbrella Iraqi National Congress, on them as leader of a new Iraqi administration.
Chalabi was the first top Iraqi opposition leader to be airlifted by the U.S. military into southern Iraq as the fighting wound down. U.S. officials said he was brought in because he offered forces to the coalition.
Neither Chalabi nor many other leaders of anti-Saddam groups are expected to attend: lower-level delegates are expected.
All those in attendance were invited by Gen. Tommy Franks, the war commander, and not by the State Department.
Even some of those attending the meeting said they did not want Garner leading the interim administration.
"We will press for any Iraqi civilian administration regardless of what the American say. An administration by Garner is not acceptable," said Mowaffak al-Rubaie, an Iraqi physician and opposition activist.
He said American officials have outlined what Garner's administration would look like: Each ministry would be headed by an American, either military or civilian. Each minister would have two American deputies and eight American advisers, plus four Iraqi advisers from inside the country and four Iraqi exiles.
A possible sticking point between the United States and its allies is the role of the United Nations in the postwar administration. France, Germany and Russia has urged a central role. The U.S. envisions an advisory one.