"The Kurdish coalition and the Shiite alliance agree in principle on a government of national unity," the Kurdish Talabani told reporters after a meeting in Dokhan, a vacation town 400 kilometers (250 miles) north of Baghdad.

However, he specified that such a plan would have restrictions.

"The other parties must believe in certain principles," including "rejection of terrorism," he said, adding that prominent Sunni Arab politican Saleh al-Motlaq "cannot be with the terrorists by night and with us by day."

Hakim, leader of the Supreme Council for the Islamic Revolution in Iraq (SCIRI) and member of the Shiite coalition holding a majority of seats in the current parliament, praised the "strategic alliance" between Kurds and Shiites.

"Our alliance does not signify exclusion of others and is not directed against anyone," said Hakim, whose conservative Shiite list is widely expected to take a majority of parliamentary seats after the December 15 election.

Minority Sunni Arabs enjoyed positions of power under the former regime of Saddam Hussein but have expressed discontent at the voting process in Iraq since his ouster. Sunni Arabs are also believed to form the backbone of Iraq's insurgency.