The UN envoy to Iraq, Lakhdar Brahimi, has said he 'respects' the nomination of a member of the interim Iraqi Governing Council to lead the country after the handover of power on 30 June.
A spokesman for Mr Brahimi has revised an earlier reaction to the decision to put forward Iyad Allawi for the post of Iraqi Prime Minister.
It is now reported that Mr Brahimi 'respects' the decision and is ready to work with Mr Allawi, a Shi'ite Muslim representative with links to the CIA.
It is not clear whether the White House supports the decision.
US Secretary of State Colin Powell said Mr Allawi's nomination was one of many ideas being discussed.
But a member of the US-appointed council has said the top American administrator in Iraq, Paul Bremer, backs the nomination.
Fresh fighting breaks out near Najaf
Fresh fighting has broken out in Iraq between coalition forces and militia loyal to the cleric Moqtada al-Sadr.
The fighting is in Kufa, near Najaf, where a truce was agreed between the two sides yesterday.
The rebel cleric, who normally preaches at Kufa's main mosque every Friday, did not appear at prayers there this morning. An aide said he did not know where the cleric was.
Witnesses say US tanks have sealed off the area around the mosque and there has been an exchange of fire between coalition forces and al-Sadr's men.
Two Japanese journalists killed
Elsewhere in Iraq, two Japanese freelance journalists have been killed.
There appears to have been a rocket-propelled grenade attack on their vehicle south of Baghdad.
The authorities in Japan have said the attack will not greatly affect Japan's dispatch of some 550 ground troops to help rebuild Iraq.
