Iraq's new Prime Minister, Iyad Allawi, says he has reached a deal to disband militias that opposed Saddam Hussein.
Militants loyal to Moqtada Sadr have not agreed to lay down their arms
About 100,000 fighters will either join the security forces or return to civilian life, Mr Allawi said.
However the pact does not cover the Mehdi Army militia loyal to radical cleric Moqtada Sadr and observers say it is unlikely to affect the uprising.
Meanwhile at least two people were killed as blasts rocked a mosque in the militia's stronghold of Kufa.
About 10 others were hurt and a compound surrounding the mosque was damaged in the blasts, after ammunition used by fighters loyal to Mr Sadr apparently caught
fire, witnesses said.
A statement by the US military said there were no US forces near the mosque when the explosions occurred, around 1100 local time (0700 GMT).
But Iraqi police who tried to provide assistance were fired on by unknown attackers within the mosque, it said.
Iraqi officials said firefighters at the scene took two-and-a-half hours to extinguish the blaze, which left two walls of the mosque "completely blackened".
Mr Sadr regularly gives sermons in the mosque.
Nine political factions - most of them represented in Mr Allawi's interim cabinet - agreed to disband their associated militias by January 2005, when elections are due.
They include the Kurdish peshmerga militias and the Badr Brigade of the Supreme Council for the Islamic Revolution in Iraq, a Shia group.
But the agreement does not include the Shia Muslim Mehdi Army - fighting US-led forces in bloody battles around Kufa and other cities, including Najaf - or Sunni insurgents in central Iraqi cities like Falluja.
"As of now, all armed forces outside of state control, as provided by this order, are illegal," the prime minister said.
"Those that have chosen
violence and lawlessness over transition and reintegration will
be dealt with harshly."
The BBC's Caroline Hawley in Baghdad said the announcement was designed to signal the new government's intention to put pressure on the militants.