Iraqi leaders have strongly criticised Egypt's president after he said Iraq was on the verge of a civil war.
Many hope a political deal will help to end the violence
Exactly three years after the fall of Saddam Hussein's regime, there is growing disagreement over whether Iraq has descended into civil war.
Many say the risk of such a conflict would be reduced with the formation of a national unity government.
Talks on the issue are deadlocked and there was little hope that Shia leaders meeting on Sunday would resolve it.
They are trying to overcome the political impasse over whether Prime Minister Ibrahim Jaafari retains the support of his Shia bloc.
Since the December elections, Mr Jaafari's nomination has been one of the main sticking points in coalition talks with Kurds and Sunnis, and many Shias are now calling for him to step down as candidate.
The US military has said 1,313 Iraqi civilians were victims of sectarian violence in March. Some analysts believe the real figure is much higher, as many bodies are never found.
On Sunday, Mr Jaafari - currently interim prime minister - appeared before reporters to dismiss suggestions made by Egypt's Hosni Mubarak that a civil war was imminent.
Flanked by Sunni and Kurdish politicians, Mr Jaafari said: "We are astonished that Egypt identifies Iraq's security problems as a civil war."
"Our people are still far away from any sectarian conflict or a civil war," he added.
"The comments have upset Iraqi people who come from different religious and ethnic backgrounds and have astonished and discontented the Iraqi government."
Mr Mubarak had told al-Arabiya TV on Saturday that civil war in Iraq "was on the doorstep".
"Civil war has almost started among Shias, Sunnis, Kurds and those who are coming from Asia," he said.
However, Iraq's leaders appear to be divided on the issue.
Speaking a day after suicide bombings in a Baghdad mosque left 90 dead, the deputy interior minister told the BBC on Saturday the country had been in a state of undeclared civil conflict for a year or more.
This is a view rejected by both the US and Britain. UK Foreign Secretary Jack Straw has said the whole situation is "very serious", but civil war has been averted because of the restraint shown by Shia leaders.
Sectarian tensions have been high since the bombing of a Shia shrine in Samarra in February.
The delay in reaching agreement on a government is thought to be partly responsible for fuelling the violence.