It's been a slow and steady return to the fold for Ahmad Chalabi (search), once disgraced and on the outs with both Iraqis and the Bush administration (search).

The former Washington favorite may have lost his bid to be Iraq's next prime minister on Tuesday, but he emerged after three days of haggling with the possibility of being named to a senior Cabinet post in the new government.

Tuesday began with Chalabi steadfastly confident he would end the day anointed by his political alliance as its candidate for prime minister.

His people said he had the numbers. Even as other contenders stepped down to preserve internal unity, Chalabi doggedly pressed ahead, determined to bring the haggling over a single candidate down to a secret ballot.

But ultimately the United Iraqi Alliance (search), led by cleric Abdel-Aziz al-Hakim, dropped the vote and insisted that Chalabi withdraw in favor of interim Vice President Ibrahim al-Jaafari.

"The withdrawal of Chalabi came as a result of pressure by Abdel-Aziz al-Hakim, after al-Jaafari threatened to withdraw from the slate in case he didn't win (the ballot)," said Ali Faisal, political coordinator for the Shiite Political Council, an umbrella group for 38 Shiite political parties.

Chalabi was forced to repeat the same refrain as others had before him, explaining to a packed news conference on Tuesday evening that he withdrew "for the unity of the alliance."

Officials within the alliance said Chalabi was now expected to take over a senior ministry — possibly defense or finance.

It's a remarkable comeback for the man who was alienated by Washington last year over accusations he'd leaked intelligence to Iran. He was also blamed him for flawed evidence on former leader Saddam Hussein's alleged weapons of mass destruction.

His ascendancy within local Iraqi political ranks is even more noteworthy, given his profile among a public resentful of the U.S. occupation as someone who enjoyed patronage by the West.

"Chalabi was always seen by many as a creature of the United States. His visibility was always higher outside of Iraq," said Anthony Cordesman, an Iraq expert at the Center for Strategic and International Studies in Washington.

"It's surprising he was able to insert his way sufficiently high into the Shiite political spectrum."

Chalabi, an MIT graduate and mathematician, left Iraq with his family in 1958. He was one of the most visible faces of exiled Iraqi opposition to Saddam Hussein.

But he riled local Iraqis when he returned after the war protected by a shield of U.S. armor and militiamen known as the Free Iraqi Forces. He promptly took over an exclusive social club in an affluent Baghdad suburb as the headquarters for his Iraqi National Congress.

Last year security forces raided his offices. There is a suspended charge of counterfeiting Iraqi dinars against him and an outstanding jail sentence for bank fraud waiting for him in neighboring Jordan.

But since missing out on any position in the interim government, Chalabi has worked solidly to build a support base in Iraq, even traveling to the holy city of Najaf last year to try to mediate a truce between battling U.S. and Iraqi forces and radical Shiite cleric Muqtada al-Sadr and his militia.

Chalabi made dropping murder charges against al-Sadr one of the tenets of his platform, should he become prime minister.

It got him enough supporters in the alliance to convince him to press ahead with the secret ballot, and it may be enough to ensure him a senior ministry when the National Assembly convenes.

Chalabi refused to show any disappointment with Tuesday's outcome, smiling throughout the press conference.

"This is not about splitting the pie! This is about the future of Iraq," he told reporters who pinned him down after the media briefing.

"Unity is more important than winning," Chalabi said, repeating with a smile: "Unity is more important than winning."