However, the United States will retain physical custody of Saddam and the prisoners, while giving Iraqi prosecutors and defense lawyers access to them, the official said on condition of anonymity.
The Americans will continue to keep Saddam and others locked up and under U.S. guard because the Iraqi government does not yet have capacity to hold such prisoners, the official said.
"Before we turn over any of the detainees, we have to make sure there is valid Iraqi court order that authorizes the government to detain those individuals," the official said. "Once the security detainees are turned over to the Iraqi government, they become criminal detainees subject to criminal due process protections."
Saddam will be in the initial group of prisoners turned over, he said. The military will not say where Saddam and other key officials of his former regime are in custody.
"Repatriating Saddam Hussein to Iraq to be tried by the war crimes tribunal is what the Geneva Convention requires and a strong statement to the world confirming the end of the occupation," CBS foreign affairs analyst Pamela Falk said last week.
Salem Chalabi, the official in charge of setting up a war crimes tribunal, has said he expected the Iraqis to issue the necessary warrants before the transfer of sovereignty June 30.
Last week, President Bush contradicted the interim prime minister's claim that the handover was imminent, saying the United States will turn over Saddam at a later time. The president declined to set a timetable, saying "appropriate security" must first be in place.
U.S. officials have also said they plan to continue to hold up to 5,000 prisoners deemed a threat to the coalition even after the restoration of Iraqi sovereignty at the end of this month.
Interim Prime Minister Iyad Allawi had said the former Iraqi president and other detainees would be transferred to Iraqi authorities in the coming two weeks. Allawi said Saddam would stand trial "as soon as possible" but gave no specific timeframe.
The former Iraqi dictator has been in U.S. custody in an undisclosed location since he was found last December, but his status has been under discussion as the U.S.-led occupation's end approaches.
The International Committee of the Red Cross has indicated that under international law, Saddam must be charged or released after the formal end of the occupation since he was detained as a prisoner of war.
Last week, interim President Ghazi al-Yawer said Mr. Bush is eager to hand over Saddam, but Iraq must have adequate security guarantees in place before the government can take custody of him.
"Even President Bush himself was asking me," al-Yawer told reporters in Baghdad after returning from the G-8 summit in Sea Island, Georgia. "The United States is very keen to hand over the ex-president to the Iraqi authorities."
Al-Yawer cautioned that security precautions must exist in order for Iraq to be able to take custody.
"We must first make sure that we can maintain protection for his life until he goes to trial," al-Yawer said. "We must make sure that the trial goes as a legal process, he has his own fair chance of defense and the government has its own chance."
The six-month old Iraqi Special Tribunal which Chalabi is organizing has struggled to put appropriate security safeguards in place.
War crimes experts have cautioned that as long as violence prevails in Iraq, the trial of Saddam and at least 100 others suspected of committing atrocities against the Iraqi people should wait — unless a foreign venue can be found.
Judges have refused to work for the tribunal after five potential candidates were killed since Saddam was toppled from power last year. Tens of millions of dollars have been spent on security alone.
It is unclear what crimes Saddam will be charged with committing.
The nonprofit group Indict, which has pressed for years for Saddam to be prosecuted for war crimes charges, contends he is guilty of aggression in wars against Iran and Kuwait, genocide for campaigns against the March Arabs and curds, crimes against humanity for using chemical weapons and brutally suppressing the 1991 Shiite revolt, and torture.
The Iraqi tribunal is empowered to prosecute war crimes, genocide, crimes against humanity and violations of specified Iraqi law.
Jacques Verges, an 80-year-old French lawyer, has