Updated

The flow of Iraqi refugees back to their homes dropped sharply last year, largely due to the political deadlock surrounding the formation of a new government, the U.N. refugee agency said Friday.

Hundreds of thousands of Iraqis were uprooted as the insurgency gained steam and retaliatory sectarian bloodshed spiked following the 2003 U.S.-led invasion. A decline in violence in recent years has prompted many to return, although the situation remains volatile.

The number of Iraqis who went home last year was 118,890, down some 40 percent from 204,830 in 2009, according to a monthly statistical update issued by the U.N. High Commissioner for Refugees.

Most returnees were internally displaced people who had fled to other parts of the country. Only 26,410 returned from Syria, Iran, Jordan and other countries, down from 37,090 in 2009, according to the report.

Citing interviews with refugees, UNHCR's envoy for Iraq Daniel Endres said the main reason for the drop was the political uncertainty amid bitter negotiations over who would lead the new government following inconclusive March 7 elections. Incumbent Prime Minister Nouri al-Maliki finally cobbled together a fragile coalition to seat a new Cabinet on Dec. 21.

The report showed the largest number of returns was 17,080 in March, the month the election was held.

"They were waiting to see what's going to happen with a new government," Endres said. "Before you take such an important decision such as whether to bring your family back, you want to make sure."

Security remained a concern for many but the lack of basic services, housing, health care and education was the second most common reason given for refugees' reluctance to go home, Endres said.

He said it was too soon to know whether the government formation would bring people back.

"I think people will still wait a bit and see if this new government brings the security dividend that everybody is expecting," he said.

In all, nearly 1.3 million refugees who had been uprooted from their homes have returned since 2003, according to the report. But hundreds of thousands more remain abroad, and the UNHCR chief Antonio Guterres estimated during a visit last week that 1.3 million Iraqis remain internally displaced, with 500,000 living in extremely precarious conditions.

The UNHCR has expressed hope that al-Maliki's new government will unite rival factions and curb the violence, but the Geneva-based agency has urged countries not to forcibly send Iraqis back.

Underscoring the dangers, Iraqi forces stepped up security in Baghdad Friday, a day after a car bomb struck a funeral in a mainly Shiite area of the capital, killing at least 51 people and wounding scores.

Shrapnel was still scattered across the streets in northwestern Baghdad where a near-riot broke out after the afternoon explosion Thursday when infuriated Iraqis pelted security forces with sticks and stones for failing to stop the deadly strike.

Government officials blamed the bombing on insurgents seeking to undermine Iraq's safety before a March meeting of Arab leaders in Baghdad. It was the latest major attack in over a week of violence in Iraq that has left more than 200 dead — mostly Shiites and security forces.

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Associated Press writer Bushra Juhi contributed to this report.