Iraq will take an important step on the road to democracy Sunday, when the first post-Saddam Hussein (search) governing body plans to hold its inaugural meeting, said the top U.S. administrator.

Diplomats and negotiators said Iraqi political leaders and the U.S.-led provisional government were putting the finishing touches on the political body.

In another step toward turning power over to Iraqis, the U.S. military said it was entrusting control of Fallujah (search), a restive western city, to Iraqi police. The move represents the first time coalition forces have agreed to leave security in the hands of local law enforcement in a heavily populated area.

L. Paul Bremer (search), Iraq's American administrator, promised the Governing Council of Iraq (search), composed of 25 to 30 prominent Iraqis, will "have real political power." The council is part of the U.S. "plan to support the establishment of this government of, by and for Iraqis," Bremer said.

"It represents all the strands from Iraq's complicated social structure — Shiites, Sunnis, Arabs, Kurds, men and women, Christians and Turkmens," Bremer wrote in an opinion piece posted on the New York Times Web site Saturday.

Bremer added that the council will have the power to work with the coalition on policy and budgets and to appoint interim ministers.  

Iraq's seven main groups that opposed Saddam's rule and other political leaders met Saturday in Baghdad and were hoping to hold a final organizational meeting in the capital the next day, said Adel Noory Mohammed, a leader of the Kurdistan Islamic Union (search). He said final details, such as how to announce the council, were still being worked out.

U.S. backtracking on creating a government has caused some Iraqis to doubt American intentions in the region, and U.S. troops have become the daily targets of a growing insurgency.

"If the Americans do not get this done quickly they will lose even more legitimacy and popularity in the eyes of the Iraqi people and they will put themselves under enormous pressure," said Mohammed. "The new government, if it is a strong government, will have the respect of the Iraqi street, and people will obey it."  

Many Iraqi political leaders want the council to announce itself, to give the appearance of independence from the occupying powers. Others want to hold a joint news conference with top U.S. officials to highlight cooperation.

The council will have the power to name ministers and select an independent central bank governor. It will be consulted by Iraq's American leaders on all important issues and is meant to be the forerunner of a larger constitutional assembly that will have about a year to draft a new constitution.

The council is expected to have a Shiite majority. Sixty percent of Iraq's 24 million people are Shiite Muslims, but the country has been ruled for decades by minority Sunnis led by Saddam.

Internationally known former exiles like Ahmed Chalabi of the Iraqi National Council (search) and former foreign minister Adnan Pachachi, and Kurdish leaders Massoud Barzani and Jalal Talabani are expected to be on the panel. Groups that remained in Iraq during Saddam's 23-year rule will have a more prominent role, the western diplomat said.

Women — who make up 55 percent of Iraq's population after decades of war — and minorities also will be represented.

National elections to select a fully sovereign Iraqi government are expected to follow sometime in late 2004 or early 2005.

Bremer had scheduled a news conference for Saturday at which he was expected to announce the council, but the meeting was canceled and no reason was given. 

The Americans promised a constitutional assembly would be set up within weeks in the aftermath of Saddam's ouster in April. But they revised their plans several times.

The governing council had at first been envisioned as a consultative panel, but Bremer later acceded to Iraqi demands for real political power.

In other developments:

— Former New York police commissioner Bernard Kerik (search), who is overseeing Iraq's Interior Ministry, said U.S. and Iraqi forces had arrested five former members of Saddam's personal security forces, four of whom were cousins of the former dictator. Authorities seized pictures that showed the four cousins torturing an unidentified man, Kerik said.

Kerik also appealed Saturday to former Iraqi police officers dismissed on political grounds in the last 10 years to apply for reinstatement. He said those under 45 years of age should apply at police stations from Aug. 15 to Nov. 1.

— The military reported that one soldier of the 4th Infantry Division died and a second was wounded in "a non-hostile gunshot incident." No details were available.

— U.S. military police securing a prison west of Baghdad came under attack early Saturday, but no casualties were reported, said Cpl. Todd Pruden, a U.S. military spokesman.

— A U.S.-appointed city council took office in Baqouba, a city northeast of Baghdad that has been the site of attacks on coalition forces.

—Attackers in a passing pickup truck threw a homemade bomb at U.S. soldiers guarding a hospital in downtown Baghdad, slightly injuring one of them.

The Associated Press contributed to this report.