Sheikh Sadreddin Kubbanji, head of the Najaf office of the Supreme Council of the Islamic Revolution in Iraq (SCIRI) said on Saturday that a deal has almost been struck.
"We have almost reached a solution but not a definitve solution," he said.
US officials had earlier announced their intention to crack down on armed Iraqi militias.
The proposed deal would limit the number of armed men authorised to perform security duties and instead pave the way for a 2,000 strong security force with participation from various existing militias.
But supporters of the fireband anti-American cleric Moqtada Sadr, who has been recruiting soldiers for his private militia, had threatened to defy the US, triggering a hectic round of talks for a compromise.
"We have almost reached a solution but not a definitve solution"
Sheikh Sadreddin Kubbanji
Head of Najaf office, SCIRI
"SCIRI has already begun to coordinate with the civil authorities in Najaf and also with the occupation forces," Kubbanji said.
On Friday, the predominantly Shia city reflected the first results of the coordinated efforts.
Militiamen stood watch unarmed during the prayers and put away their badges after they were over. The streets were left to be patrolled by the police and the Polish forces, who have replaced US troops in the Shia city.
Kubbanji said SCIRI and its 10,000-strong Badr Brigade milita did not have weapons, maintaining that the organisation have always been leading a political and diplomatic campagin.
"But the occupation forces are confronted with the reality that the police do not have enough weapons…and the people are obliged to carry arms, " he said.