The report is crucial and could possibly help to break the impasse over the US plans to hand over power in Iraq by the end of June. The US meanwhile has said it is keenly awaiting the report.

"I hope we will be able to help break the impasse and steer things in the right direction," Annan said on Tuesday.

The handover plan by the US is mired in uncertainty with Iraq's Shia majority demanding direct elections instead.

UN views

UN officials have already said elections, as preferred by Shias are not possible by the 30 June handover date and that a US-proposed system of selecting an assembly by caucuses was also not feasible.

They also do not believe it would be wise to push back the 30 June date, set by Washington to transfer power to Iraqis.

Annan's report will expectedly recommend other options for a transfer of power before June, which could range from expanding the current Iraqi Governing Council to forming a new body, such as delegates to a conference on devising fundamental laws.

US firm

In Washington, Secretary of State Colin Powell said the US was sticking to its 1 July deadline for the handover, but at the same time remained opened to ideas from the United Nations.

"We have got an open mind on it," Powell said, referring to Annan's report.

Annan's special adviser, al-Akhdar al-Ibrahimi, a former Algerian foreign minister, spent a week in Iraq studying the possibility of holding elections or coming up with an alternative.

Al-Ibrahimi has already said organising elections by 30 June will pose major difficulties in the current security climate. He said the demand for a quick election was legitimate, but holding a credible poll was also important.