Iraq's rival parties were negotiating the contours of a new government on Monday, after the previous cabinet was brought down by a two-month protest movement insisting on even more deep-rooted change.

After just over a year in power, premier Adel Abdel Mahdi formally resigned Sunday after a dramatic intervention by top Shiite cleric Grand Ayatollah Ali Sistani.

That followed a wave of violence that pushed the protest toll to over 420 dead -- the vast majority of them demonstrators.

Parliament on Sunday formally tasked the president with naming a new candidate, but Iraq's competing factions typically engage in drawn-out discussions before any official decisions are made.

Talks on a new premier began before Abdel Mahdi resigned, a senior political source and a government official told AFP.

"The meetings are ongoing now," the political source added.

Such discussions produced Abdel Mahdi as a candidate in 2018, but consensus will be harder this time around.

"They understand it has to be a figure who is widely accepted by the diverse centres of power, not objected to by the marjaiyah (Shiite religious establishment), and not hated by the street," said Harith Hasan, a fellow at the Carnegie Middle East Center.

The candidate would also have to be acceptable to Iraq's two main allies, arch-rivals Washington and Tehran.

A protest movement has been rocking Iraq for two months
A protest movement has been rocking Iraq for two months AFP / AHMAD AL-RUBAYE

"The Iranians invested a lot in the political equation in the last few years and won't be willing to give up easily," said Hasan.

Tehran's pointman on Iraq, Qassem Soleimani, who heads the Iranian Revolutionary Guard Corps' foreign operations arm, arrived in Iraq last week for talks, official sources said.

The United States said that Soleimani's presence showed that Iran was again "interfering" in Iraq, accusing Tehran of having "exploited" the neighbouring country.

David Schenker, the top US diplomat for the Middle East, also called the weekend killing of 40 protesters in the flashpoint city of Nasiriyah "shocking and abhorrent."

"We call on the government of Iraq to investigate and hold accountable those who attempt to brutally silence peaceful protesters," he told reporters in Washington.

Protesters hit the streets in October in Iraq's capital and Shiite-majority south to denounce the ruling system as corrupt, inept and under the sway of foreign powers.

Despite the oil wealth of OPEC's second-biggest crude producer, one in five Iraqis lives in poverty and youth unemployment stands at one quarter, the World Bank says.

Demonstrators say such systemic problems require more deep-rooted solutions than Abdel Mahdi's resignation.

Iraqi demonstrators say the resignation of prime minister Adel Abdel Mahdi is not enough and insist on even more deep-rooted changes
Iraqi demonstrators say the resignation of prime minister Adel Abdel Mahdi is not enough and insist on even more deep-rooted changes AFP / Hussein FALEH

"We demand the entire government be changed from its roots up," Mohammad al-Mashhadani, a doctor protesting in Baghdad's Tahrir Square, said on Monday.

Nearby, law student Abdelmajid al-Jumaili said that meant parliament and even the president would have to go.

"If they get rid of Abdel Mahdi and bring someone else from the political class, then nothing changed. They'd just be two sides of the same coin," said Jumaili.

But the protesters' demand for an entirely new face has complicated the search for a new premier.

Two political heavyweights said they opted out of current talks: former premier Haider al-Abadi and unpredictable cleric Moqtada Sadr, who had backed the government until protests erupted.

"They're aware the bar is too high and it's too difficult for them to please the street," said Hasan.

At the same time, a totally new player is unlikely to be trusted by the established political class.

"The discussions now are over someone from the second or third tier of politicians," the government source told AFP.

"It's not possible to have someone new. It has to be someone who understands the political machine to push things along."

The government and political sources said parties were considering a "transitional" cabinet to oversee electoral reform before an early parliamentary vote.

"This process will take no less than six months," the official said.

A new voting law has been a key demand of protesters as well as Sistani, and is now a centrepiece of the government's proposed reforms.

On Monday, Parliament Speaker Mohammed al-Halbusi held meetings with the main legislative blocs, the United Nations and parliament's legal committee to discuss a draft law, with more talks expected on Tuesday.

President Barham Saleh met the UN's top representative in Iraq, Jeanine Hennis-Plasschaert, as well as the European Union's ambassador to the country.

Iraq's entrenched political elite has been struggling to "think outside the box" to resolve the crisis, Hasan said.

Beyond the rising death toll from protests, rights groups have slammed the harassment, kidnapping and even killing of activists, medics and regular protesters in recent months.

"Authorities are failing Iraqi citizens by allowing armed groups to abduct people, and it will be up to the government to take swift action against these abuses," said Human Rights Watch's regional director Sarah Leah Whitson.