Al-Jaafari's selection came after former Washington ally Ahmad Chalabi dropped out of the race following three days of round-the-clock bargaining. Al-Jaafari has been seen as having close ties to Iran's ruling clergy, though he denies any links to a government that President Bush has said is part of an "axis of evil."
But al-Jaafari must now build a ruling coalition and win agreement from the Kurds and others on candidates for Cabinet posts and the largely ceremonial presidency before seeking the support of a majority of the National Assembly elected Jan. 30.
It may not be easy for the 58-year-old physician from the Shiite holy city of Karbala. He'll have to meet conflicting demands from Kurds, Sunni Arabs and even Islamic hard-liners within his United Iraqi Alliance, which won about 51 percent of the seats in the assembly. A two-thirds majority is required for approval of the presidency — the first step in the process for the top positions.
"The Kurds will not ally with any nominee for the prime ministerial post unless he meets their demands," Noshirwan Mustafa, a top Kurdish leader, told The Associated Press.
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Al-Jaafari said dealing with insurgents and re-establishing security would be the first task of his government if he becomes prime minister. "The security situation is the first matter we will address," he said.
Some of Chalabi's aides, including Qaisar Witwit, suggested he was being offered the post of deputy prime minister in charge of economic and security affairs. When asked about such a deal, Chalabi said simply, "We will see."
Chalabi said he dropped out of the race "for the unity of the alliance." He would not say if he had been offered a post in the new government.
Until Chalabi agreed to withdraw, the 140 members of the alliance had planned to decide between the two in a secret ballot Tuesday.
The decision came after three days of round-the-clock negotiations by senior members of the clergy-backed alliance, which emerged from the election with a 140-seat majority in the 275-member National Assembly, or parliament.
The office of Abdel Aziz al-Hakim, leader of the Supreme Council for the Islamic Revolution in Iraq, or SCIRI, confirmed that Chalabi had withdrawn his bid to be prime minister.
"Chalabi announced his withdrawal and everyone agreed on al-Jaafari. Then Chalabi declared his support to al-Jaafari," said Haytham al Husaini, a top al-Hakim aide.
SCIRI, the main group making up the alliance, tried for days to persuade Chalabi to quit the race, some of its senior officials said.
Al-Jaafari's only other likely opponent for the post would be interim Prime Minister Ayad Allawi, who was nominated for the job by his group. The Iraqi List got only 14 percent of the vote — or 40 seats — in the election.
Al-Jaafari would not say if he had approached Allawi with an offer so that he would drop out.
"Whether someone is a member of the alliance or not doesn't mean they don't have the opportunity to play a role in this new government," al-Jaafari said.
The United Iraqi Alliance took 48 percent of the vote last month but needs to form a coalition with smaller parties to form the new government.
Kurdish parties, who won 26 percent, have indicated in the past they would support the Shiite candidate for prime minister in return for support for their candidate for the presidency.
The assembly must approve candidates for president and two vice presidents by a two-thirds majority. The president and vice presidents, in turn, will nominate a prime minister, who must be approved by a simple majority of the assembly.
The assembly also will draft a constitution.
A date for the parliament's opening has not been set.
The conservative Al-Jaafari, a 58-year-old family doctor, is the main spokesman for the Islamic Dawa Party, which waged a bloody campaign against Saddam Hussein's regime in the late 1970s. Saddam crushed the campaign in 1982 and Dawa based itself in Iran.
In an interview with The Associated Press last week, he said calling for the immediate withdrawal of coalition troops would be a "mistake," given the lack of security in Iraq.
The secular Chalabi is a former exile leader who heavily promoted the idea that Saddam had weapons of mass destruction. He later fell out with some key members of the Bush administration over allegations that he passed secrets to Iran.