"The law has been passed. We see it as a very good sign of progress and it will greatly benefit Baathists," Rasheed al-Azzawi, a Sunni member of the committee which helped modify some of the language of the law, said.

"It was passed smoothly and opposition was small."

Reconciliation effort

The bill is regarded by the US as vital to reconciliation efforts in Iraq but had been stalled before parliament by hardline Shias who demanded that it also include measures to compensate victims of Saddam's regime.

The new law will allow thousands of former party members to apply for reinstatement in the civil service and military, while pensions will be given to a smaller group of more senior members still banned from public life.

It makes a distinction between two categories of Baath party officials who have been barred from state employment since 2003.

Only senior party leaders who were in the top five of the party's ten levels and who implemented the oppressive policies of Saddam's government would remain subject to the ban.
 
Middle-ranking officials and those in the bottom five levels of the party structure would be able to resume government jobs.

US officials hope the new law will go some way towards easing mistrust between Shias and Sunnis in Iraq.

However Hoda Abdel-Hamid, Al Jazeera's Iraq correspondent, said the fact that only 143 members of parliament approved the law, just three more than the quorom of 140, meant there was some opposition to the bill.

She said that immediately following the parliamentary session a press conference was called by several opposition parties, including that of the former prime minister Ayad Allawi.

They said the new law will only increase divisions in Iraq and further isolate Baathists who are excluded from the legislation