A United Nations security team has arrived in Iraq to see if it is safe enough to send election experts.
Iraqi Shias are calling for early direct elections
The US and Iraq had asked the world body to send experts to investigate the chance of a vote by the end of June.
UN Secretary General Kofi Annan agreed to the request, but said he had to be convinced the mission was safe.
The US-led coalition has been resisting pressure from Shia Muslims to hold direct elections before it transfers power to Iraqi leaders in June.
"I strongly hold to the idea that the most sustainable way forward would be one that came from the Iraqis themselves," Mr Annan said in a statement in Paris.
The team would report to him on its return to New York, he said.
The UN pulled its international staff out of Iraq in October, following two suicide attacks against its headquarters in Baghdad.
A spokesman for the US-led coalition, Charles Heatly, said he welcomed the secretary general's statement of intent.
Meanwhile Mahmoud Othman, a Kurdish member of the Iraqi
Governing Council (IGC) called Mr Annan's decision "a positive one".
But he said the council should agree a "united position".
POWER TRANSFER SCHEDULE
Feb 2004: Fundamental Law (provisional constitution) to be introduced
May, 2004: Selection of Transitional National Assembly (TNA)
June 2004: TNA to take power; Coalition Authority and Governing Council to dissolve
March 2005: Constitutional Convention elected to draft new constitution
Dec 2005: New constitution; elections and appointment of new government
Mr Annan's announcement came as the US administration said it was reviewing the intelligence it was using to justify the war.
The White House is standing by its decision to topple Saddam Hussein, despite the US failure to find illegal weapons stockpiles in Iraq.
In other developments:
- Two employees of US network CNN are killed in an ambush on the outskirts of Baghdad;
- A large explosion in Khaldiya, west of Baghdad, kills at least three US soldiers;
- UK Prime Minister Tony Blair prepares for the release of the crucial Hutton report investigating the death of weapons expert David Kelly, named as the suspected source of a BBC report claiming the government "sexed up" a dossier on the threat from Iraq.
It has been more than a week since the US administrator in Iraq, Paul Bremer, and an IGC delegation requested that a UN mission be sent to Iraq.
The US-led Coalition Provisional Authority has been planning a series of caucus meetings to choose an Iraqi assembly which would then select a government.
This is opposed by the majority Shia community, who favour an elected transitional legislature.
Tens of thousands of Shias have demonstrated against the US plans.
But Iraq's leading Shia cleric, Ayatollah Ali al-Sistani, on Friday urged his followers to halt mass protests against the US plans until the UN rules on the issue.
The US opposes early direct elections because of the security situation and absence of electoral rolls.
The Americans hope that if the UN team agrees there is no time to hold the polls they could persuade those demanding elections to accept an alternative.