The United States and Britain asked UN members today to endorse a hand-over of power to a new Iraqi interim government but proposed US troops could "take all measures" to keep order.
The draft UN Security Council resolution, which asks for support for a US-led multinational force, however, gives no date for the withdrawal of foreign troops.
It is also silent on the future of US prisons and Iraqi control over its own forces.
An interim government drawn from Iraq's various religious and ethnic communities is expected to be formed in the next week or so, with help from UN Iraq envoy Mr Lakhdar Brahimi. No vote is expected until Mr Brahimi reports back to the council.
The resolution, presented to the council, would support the formation of a "sovereign interim government" to take office by June 30th. It says that government would "assume the responsibility and authority for governing a sovereign Iraq."
"This resolution marks a new phase in the transition to democracy for Iraq. It recognises the end of the occupation and the beginning of sovereignty for the Iraqi people," said White House spokesman Mr Scott McClellan.
The measure would give Iraq's new ministers control of oil revenues but keep an international audit board for a year to check on expenditures, in order to encourage foreign investments.
The draft emerged as President George W. Bush prepared to deliver a televised speech tonight mapping out his plans for Iraq, where attacks on occupying forces have thrown into doubt prospects for a peaceful transfer to democratic rule.
Iraqi leaders and some Security Council members, notably France and Germany which opposed the war, have pressed Mr Bush to ensure the new Baghdad government is given real independence.
French diplomats immediately said the resolution should have an expiry date for US troops in Iraq, unless the Iraqis ask them to stay.
US deputy ambassador Mr James Cunningham said the 130,000 American troops would go if an Iraqi government asked them to and that Iraqi control over its own forces would be the subject of a letter between the US government and the new Iraqi leaders. France said that should be part of the resolution.