Ayat Allah Ali al-Sistani said on Friday that the United Nations should be granted time to study whether polls are possible.
But in a move that could undermine Sistani's apparent flexibility, fellow Shia leader Muqtada Sadr branded the United Nations a "dishonest" body that served America's agenda and had no role to play in future Iraqi elections.
Sistani and Sadr have brought tens of thousands of Shias onto the streets over the past week as the emerging weight of Iraq's religious majority, held back under Saddam Hussein, was brought to bear on occupation authorities.
The protests have prompted Washington to consider a compromise on a power transfer timetable agreed on 15 November that envisages an unelected provisional government to take control of Iraq by 30 June.
Sheikh Abd al Mahdi al-Karbalai said the plea to suspend demonstrations was endorsed by the marjaiya, four clerics who represent Iraq's highest Shia religious authority.
UN Iraq mission
Sistani's representative in the central city of Karbala told worshippers at Friday prayers that it was "vital today to wait until the United States and the UN clarify their positions on election procedure".
"I refuse the participation of the United Nations in supervising elections, because it is not honest and it follows America... The meeting between the so-called Governing Council and the occupier does not represent any religion or any of the Iraqi people's parties"
US occupation overseer Paul Bremer and members of the US-installed Iraqi interim Governing Council held talks on Monday with UN chief Kofi Annan.
The Najaf-based cleric was briefed on Monday's New York talks by the main Shia political party, the Supreme Council of the Islamic Revolution in Iraq, a spokesman for the party said.
"I told Sistani that the UN mission (to assess the feasibility of elections) would take place in the coming days. The Ayat Allah insisted on the need for elections and we assured him that they will take place before June," said Hamid al-Bayati.
UN 'not honest'
Meanwhile, in Kufa, Sadr was stoking resentment towards both the United Nations and United States, lambasting Monday's talks as potentially harmful for Iraq.
"I refuse the participation of the United Nations in supervising elections, because it is not honest and it follows America," said Sadr.
"The meeting between the so-called Governing Council and the occupier does not represent any religion or any of the Iraqi people's parties.
The cleric, whose prominent father was killed under Saddam's regime, also called for the formation of a unified religious body to draft an "Islamic constitution" for Iraq.
"I refuse the participation of America in elections and the drafting of a constitution," he said.
Chalabi says US plans for Iraq
may lead to instability
Under the 15 November agreement, Iraq will be ruled under a temporary constitution, or fundamental law, which does not envisage full elections until late 2005.
In another development, a leading pro-US member of Iraq's Governing Council has also called for direct elections before the July handover of power.
Ahmad Chalabi urged Washington on Friday to give in to popular demand because its transition plan could destabilise the country.
Chalabi, who has close ties to the Bush administration, said elections were possible, thus increasing pressure on Washington to change its stance that there was no time to organise a vote.
He warned that the US-preferred alternative of indirect elections in caucuses was a "sure fire way to have instability" because it could produce weak leaders who are not representative of the people.