Campaigning for the March 7 vote has already been postponed for a week due to the dispute after a panel of judges said around 500 people accused of ties to the war-torn country's former regime could after all run for office.

Prime Minister Nuri al-Maliki's government last week branded the ruling to reinstate the candidates as "illegal" and recalled parliament for an emergency session that is due to start at 4.00 pm (1300 GMT).

There were demonstrations against the overturn of the ban in Baghdad and the dominant Shiite cities of Basra and Najaf on Sunday.

Several hundred protesters congregated outside Baghdad provincial government headquarters, carrying banners that read "We condemn and reject the return of the Baath Party," and "No Baathists or Saddam."

The judges decided to allow the previously barred candidates to stand, saying they would examine their files after the polls and would eliminate them if they were found to be Baathists.

A statement from Maliki's office on Saturday said leaders had "agreed on the need to resolve the issue of those barred (from the elections) according to the law."

It was released after a meeting between Maliki, Supreme Court chief Madhat al-Hammud, parliament speaker Iyad al-Samarrai, deputy speaker Khaled al-Attiya and Deputy Prime Minister Roz Nuri Shawis.

The officials also decided "to ask the magistrates to issue a ruling based on the evidence they were given and to accomplish their duty before campaigning starts" on February 12, the statement said.

The blacklist was compiled last month by an integrity and accountability committee, sparking tensions between the country's Shiite majority and its Sunni Arab former elite.

It includes -- both Sunnis and Shiites -- suspected Baathists and alleged members of Saddam's once deadly Fedayeen (Men of Sacrifice) militia and Mukhabarat intelligence division.

The election, the second in Iraq since Saddam's ouster, is seen as a test of reconciliation between the Sunni minority dominant under the former dictator and the Shiite majority represented by the present government.

US Secretary of State Hillary Clinton said Friday she was "heartened" by the decision to reinstate the previously banned candidates and urged all parties to do nothing to undermine the legitimacy of elections.

The row over who can take part in the vote, however, has underscored the fragility of Iraq's democracy, alarming Washington who sees the election as a crucial precursor to a complete military withdrawal by the end of 2011.

There are currently 107,000 US troops in Iraq but the number is scheduled to fall to 50,000 by August when all American combat soldiers are due to pull out.

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