Iraq took an important step on the road to democracy Sunday when the first post-Saddam Hussein (search) governing body held its inaugural meeting, U.S. and Iraqi officials said.

The panel of 25 prominent Iraqis from diverse political and religious affiliations was named at the meeting. The council, designed to help fill Iraq's postwar power vacuum, will have real political muscle, with the power to name ministers and approve the 2004 budget, but final control of Iraq still rests with U.S. administrator L. Paul Bremer (search).

Security was tight at the Baghdad convention center, near where the council meeting was taking place. Fighter jets flew over the city early Sunday, and helicopters circled the area. Bomb-sniffing dogs were on hand at the convention center, and scores of heavily armed U.S. soldiers kept watch.

Coalition officials handed out a list of the 25 council members, and a news conference was expected later in the day.

The panel was selected after more than two months of consultations that culminated in intense negotiations this week. Bremer was believed to have seen its quick establishment as critical to the success of the American mission in Iraq. People have clamored for say in the running of their country, and several U.S. delays and backtracking fueled a common perception that the Americans were here to colonize, rather than liberate, the country.

Television pictures showed council members chatting genially around an oval table, covered with green baize, each with a nametag and microphone in front of them.

The council has 13 Shiites, 5 Kurds, 5 Sunnis, 1 Christian and 1 Turkoman -- a woman. The move is an attempt to reflect the country's diverse demographics. Shiites make up about 60 percent of Iraq's 24 million people, but they have never ruled the country.

On the panel are Iraqi National Congress leader Ahmed Chalabi (search), Abdel-Aziz al-Hakim, a leader of the Supreme Council for the Islamic Revolution, Massoud Barzani and Jalal Talabani, leaders of the two main Kurdish groups, and former foreign minister Adnan Pachachi.

The group, however, is dominated by lesser known Iraqis, many of whom remained in their country during Saddam's 23-year dictatorship. A Turkoman woman and an Assyrian Christian are on the list, as well as a human rights activist and a member of Iraq's Communist Party. Two women were among the panelists.

"The launch of the Governing Council will mean that Iraqis play a more central role in running their country," Bremer said in a speech on Iraqi television Saturday. "It will represent the diversity of Iraq: whether you are Shiite or Sunni, Arab or Kurd, Baghdadi or Basrawi, man or woman, you will see yourself represented in this council."

One of the council's first goals will be to convince the Iraqi people that it represents them, despite the fact they never had a chance to vote on its members. Coalition leaders say an election in Iraq is not yet practical.

The panel is meant to be the forerunner of a larger constitutional assembly that will have about a year to draft a new constitution. A senior Western diplomat has told The Associated Press that a preliminary constitutional committee is expected to be named within two to three weeks.

By mid- to late-September, the 200-250 strong Constitutional Convention is expected to take office and begin deliberations. The convention is expected to take nine months to a year to produce a draft constitution, after which Iraqis will hold a referendum to vote on the document. Free elections to pick a government are expected to follow.

Entifadh Qanbar, a spokesman for Chalabi, described the council's convening as "a positive step and a historic day for Iraq."

"The United States has no intention of colonizing Iraq and Mr. Bremer has told me personally that he will not intervene and will stay clear from political decisions made by the council," he said. Qanbar said the council members will elect a chairman, possibly later Sunday. In the streets, Iraqis welcomed the move.

"The formation of this council which represents all sectors of Iraqi society is the birth of democracy in the country. It is better than Saddam's government of destruction and dictatorship," said Razzak Abdul-Zahra, a 35-year-old engineer.

Others were hopeful but skeptical of U.S. intentions.

"We do not want to see this council used by the Americans as a tool to achieve their goals in Iraq," said Bassem al-Duleimi, a 22-year-old university student.

In the days after Saddam fell in April, the Americans promised a constitutional assembly would be set up within weeks. But they backed off that promise, and have revised their plans several times. The governing council was at first envisioned as a consultative panel, but Bremer later acceded to Iraqi demands that it be given real political power.

Adel Noory Mohammed, a leader of the Kurdistan Islamic Union, one of the groups represented on the council, said it is in the interests of both the Iraqis and the Americans that the council be given wide powers.

"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," he said. "The new government, if it is a strong government, will have the respect of the Iraqi street, and people will obey it."

The Associated Press contributed to this report.