The decision appeared to resolve a key sticking point - who will be allowed to vote in the disputed, oil-rich city of Kirkuk. The issue had threatened to delay Iraq's key parliamentary elections, which in turn would affect how quickly U.S. combat forces could leave the country.

In a sign of how intensely Washington was following the debate, U.S. Ambassador Christopher Hill could be seen shuttling between various political factions before the law's passage. President Obama, speaking at the White House, welcomed the legislation's passage.

"This is an important milestone as the Iraqi people continue to take responsibility for their future. I want to congratulate Iraq's leaders for reaching this agreement," Obama said. "The United States will continue to stand with Iraq as a strong partner and as a friend."

Iraq's prime minister, Nouri al-Maliki, hailed the election law's passage as a "historic victory of the will of the people," and he described it as a strong response to the people who are trying to undermine the country's security.

The U.S. ambassador, speaking to reporters after the vote, said the U.S. troop drawdown would proceed as scheduled. Military commanders have said the U.S. troop withdrawal would start about 60 days after the vote, the idea being that the country would be on stable footing by then. "What is important is that with the election law, we are very much on schedule for the drawdown," Hill said.

Under the president's plan, all U.S. combat troops will be out of the country by the end of August 2010, leaving about 50,000 trainers and support troops, who in turn would leave by the end of 2011.

It was not clear exactly when the election would be held - Jan. 16, as originally planned, or later in January. The head of the Independent High Electoral Commission, Faraj al-Haidari, said he expected the vote to be held within a week of Jan. 16.

The law's passage had been repeatedly delayed by sharp disagreements over how voting would take place in the northern city of Kirkuk, claimed by both Arabs and Kurds and a major flashpoint in the country.

Kurds consider Kirkuk a Kurdish city and want it part of their self-ruled region in northern Iraq. During the rule of former dictator Saddam Hussein, tens of thousands of Kurds were displaced under a forced plan to make Kirkuk predominantly Arab, though many of these have since returned.

The Arab-led central government vehemently opposes anything that would remove Kirkuk from its control.

Under the legislation passed yesterday, the vote in Kirkuk would be held just like in other regions around the country, but the votes - and those in other disputed areas - could be subject to a special review if it is determined there was a large population increase. Arabs and the Turkmen claim Kurds have packed the city with immigrants to tip the balance in their favor.

The legislation did not include any guaranteed seats for Arab and Turkmen lawmakers from Kirkuk, something which had been discussed in earlier versions.

Both Kurds and Arabs claimed victory.

"This is a good law because it occurred after broad agreement," said Mahmoud Othman, a Kurdish lawmaker.

Omar al-Jabouri, a Sunni member of parliament, called the voting "a great victory," because, he said, Kurds were forced to accept special circumstances in regards to the Kirkuk voting.