Mr Hashemi said he believed the veto need not delay the elections
One of Iraq's two vice-presidents has vetoed part of the country's new election law, putting the parliamentary polls scheduled for January in doubt.
Tariq al-Hashemi, a Sunni Arab, revoked Article 1 of the law and called for the representation in parliament of displaced people to increase to 15%.
Most Iraqis who have fled violence since 2003 are thought to be Sunni.
Electoral officials say they have suspended preparations for a January vote until an amended law is approved.
"As a result of the veto, we have decided to stop all our activities and work as we await a final law with a presidential decree that determines the exact date of the election," Hamdiya al-Hussaini of the Independent Electoral Commission told Reuters news agency.
The commission requires 60 days notice to prepare for the vote, which had been scheduled to be held between 18 and 23 January. Constitutionally, it must be held before the end of that month.
The election is seen as a prerequisite to the US meeting its goal of pulling out combat troops by 31 August 2010, ahead of a full withdrawal by the end of 2011.
A US spokesman described the development as "disappointing".
"We urge Iraqi leaders in parliament to take quick action to resolve any of the outstanding concerns that have been expressed so elections can go forward," the state department's Ian Kelly said.
Mr Hashemi said he objected to Article 1 of the law because it did not give a voice to the four million Iraqis, mostly Sunni Arabs, whom he believed had fled the country in the wake of the sectarian conflict triggered by the US-led invasion in 2003.
Under the text approved by the Council of Representatives, the proportion of "compensatory seats" in the chamber representing the displaced would be set at 5% of the total. Mr Hashemi wants the figure raised to 15%.
"I sent a letter to parliament asking for the law to be amended. Parliament said I could veto the contested first article, which is what I have done today," he told a news conference in Baghdad.
"The proposed amendment affords justice to all Iraqis abroad, in all countries, and not just those residing in, or forcefully displaced to, neighbouring countries," he added.
"Furthermore, the amendment would consecrate the concept of political pluralism and would preclude the monopolisation of the political scene by the strong electoral lists that win the elections."
Mr Hashemi, the head of the Iraqi Islamic Party, said that despite the veto he was not against the law as a whole, nor did he want to see further delays that could prevent elections being held in January.
2003: US appoints Governing Council
2004: Governing Council elects interim government
Aug 2004: National conference elects Interim National Assembly
Jan 2005: First general elections for Transitional National Assembly and provincial councils
Dec 2005: General elections for first full-term government and new parliament, the Council of Representatives
Jan 2009: Polls for provincial councils - key test of security gains
He believed the issue could be dealt swiftly in one session of parliament, opening the way for its final ratification by the three-man Presidency Council and allowing campaigning to begin.
A Kurdish member of the parliamentary legal committee, Khalid Shwani, said it would study the suggested changes as soon as they received them.
"I can't put a specific timetable on the vote because it will depend on how long the discussions take," he told the Associated Press.
Iraq's Shia Prime Minister, Nouri Maliki, described the veto as a serious threat to the political process and democracy, and he called on the election commission and political parties to continue their preparations for elections in January.
"It has no solid constitutional basis," Mr Maliki said in a statement. "The high national interests were not taken into consideration."
The BBC's Jim Muir in Baghdad says Mr Hashemi's veto is not the only problem facing the elections - the Kurds in the north of the country have said they could boycott them altogether.
Kurdish leaders have said they are angry that only three of the 48 extra seats in the new chamber have been allocated to the three mainly Kurdish provinces of Dohuk, Arbil and Sulaimaniya. They see it as a move to diminish their voice in Baghdad.
An election without the Kurds is hard to imagine, so more time will have to be taken up to reach a resolution, our correspondent says.