France, Germany and Russia have agreed to approve American military leadership but have demanded US civilian control should be downgraded in favour of Iraqis and the United Nations.
The three nations submitted amendments, circulated on Wednesday, to a US-drafted Security Council resolution shortly before a weekend foreign ministers' meeting in Geneva to see if a compromise can be reached.
However, US Secretary of State Colin Powell immediately ridiculed the idea of giving up power quickly, during an interview with Aljazeera.
"Suggestions that ... all we have to do is get up tomorrow morning and find an Iraqi who is passing by and give him the government (and) say, 'You're now in charge and Ambassador (Paul) Bremer and the American Army are leaving,' that's not an acceptable solution," Powell said.
In Bush's televised speech on Sunday, he asked other members of the UN to support the administration's attempts to rebuild war-ravaged Iraq.
"Members of the United Nations now have an opportunity - and the responsibility - to assume a broader role in assuring that Iraq becomes a free and democratic nation," he said.
The Bush administration has proposed transforming the occupying armies into a UN-authorized multinational force, with an expanded command centre under US leadership.
Washington's aim is to get troops involved from nations including India, Pakistan, Turkey and Bangladesh, who say they need a UN mandate to participate.
Colin Powell dismissed ideas of handing over control
France and Germany made no objection to the force but they want the United States and Britain to accelerate the end of the occupation and give Iraqis more authority over civilian life, including oil resources.
The Franco-German document, issued separately from milder Russian amendments, calls for the UN endorsement of Iraq's Governing Council (IGC) and cabinet as a "trustee of Iraqi sovereignty" until an elected government is established.
Too occupied for OIC
Despite its growing acceptance among the key members of the UN, the IGC is being blanked by the Organisation of the Islamic Conference (OIC) whose summit is being held in Malaysia next month, said the country's Foreign Minister Sayyid Hamid Albar on Thursday.
"Iraq is essentially still a country under occupation," Sayyid Hamid told reporters.
"For the time being, our view is that Iraq's seat will be left vacant even though the country's nameplate will be there.
"If the United Nations was the core player in Iraq, then it would be a different situation," he said.
Sayyid Hamid added, however, that if a request to attend was made by the IGC, a decision would have to be taken by the OIC credentials committee.
The summit of the 57-nation organisation is due to be held in Malaysia from 16-18 October.
Arab league rubber stamp
However, the Arab League on Tuesday announced its acceptance of the IGC after having initially refused to deal with a government set up under a US-led military occupation.
In their resolution on Iraq, the ministers of the 22-member League also called for a "central UN role" in the rebuilding of Iraqi national institutions and in the reconstruction of the country devastated by war, sanctions and dictatorship.
"We would like to see the development of Iraq, we would like Iraq to be brought to the mainstream of Islamic countries but there are certain procedural things that have to be sorted out"
Malaysian foreign minister
Zebari was allowed into the meeting following a decision by the Arab ministers to temporarily offer to the Governing Council the seat of Iraq, vacant since the ouster of Saddam Hussein, in April.
The offer was made on the condition that the council, appointed in July by the US-led coalition, undertakes to speed up the formation of an elected government to seek the end of the occcupation of Iraq.
US State Department spokesman Richard Boucher welcomed the League's decision as a "growing acknowledgement" of Iraq's progress towards self-government.
Critics, however, have said the move would help the US prolong its occupation of Iraq.
Bin Ladin urges resistance
The Malaysian government fiercely opposed the US-led war on Iraq and has called for a greater UN role in rebuilding the country.
"We would like to see the development of Iraq, we would like Iraq to be brought to the mainstream of Islamic countries but there are certain procedural things that have to be sorted out," Sayyid Hamid said.
Meanwhile, al-Qaida figurehead Usama bin Ladin made a surprise appearance in a videotape aired on Aljazeera on Wednesday to mark the second anniversary of the September 11 attacks, along with his top aide who urged fighters to turn Iraq into a graveyard for American troops.
Bin Ladin's name was notably absent from Bush's speech on Sunday that mentioned the attacks on New York and Washington several times as justification for the the policy of preemptive strikes against sovereign nations in the name of preventing "terrorism".