Iraq's largest parliamentary bloc, the Shia United Iraq Alliance (UIA), has nominated Jawad al-Maliki as its choice for the post of prime minister.
Mr Maliki's nomination could clear a major political stumbling block
The decision came a day after the Shias' first choice, Ibrahim Jaafari, agreed to step down.
Sunni and Kurdish parties had opposed Mr Jaafari's candidacy.
The main Sunni coalition, the Iraqi Accord Front, has shown initial agreement with Mr Maliki's nomination, a spokesman said.
Mr Maliki has also not been opposed by any of the outside powers who are influential here, says the BBC's Jim Muir in Baghdad.
Disagreement over the new prime minister has held up the formation of a new government, months after elections.
Mr Maliki's nomination came after Mr Jaafari signalled on Thursday that he was willing to stand aside.
Sunni and Kurdish parties had objected to Mr Jaafari's nomination in February, accusing him of failing to tackle growing sectarian violence.
Deputy leader of the Daawa, Iraq's oldest Shia party
Served on de-Baathification committee
Served on committee drafting Iraq's constitution
Deputy speaker of the interim National Assembly
Fled Iraq for Syria in 1980s and returned after invasion
Our correspondent says the expectation now is that Mr Maliki's nomination will be formalised by the Shia coalition in time for a meeting of parliament on Saturday afternoon to endorse that and the filling of other top positions, including the presidency and the speakership of parliament itself.
That should clear the way for the formation of a long-awaited national unity government without too much further delay, he says.
Mr Maliki, a close ally of Mr Jaafari, recently headed a committee which purged members of Saddam Hussein's Baath party from public life, raising fears his nomination might be rejected by Sunni factions.
However, Sunni politicians indicated they would not oppose Mr Maliki.
"We welcome the choice of Mr Maliki and believe that we can now form a national unity government in Iraq which will be non-sectarian," Zhafer al-Ani, a spokesman of the National Concord Front, told AFP news agency.
"We hope that Maliki will be a better leader than his predecessor Ibrahim al-Jaafari," he was quoted as saying.
Mr Maliki has been acting as spokesman both for the Daawa party and for the broader coalition of seven Shia factions which make up the strongest parliamentary bloc and, therefore, has the right to nominate the premier.
Sentenced to death by Saddam Hussein for belonging to Daawa, Mr Maliki fled Iraq in 1980 and took refuge in Syria.
He has been in charge of Daawa's internal political organisation and has taken an active part in helping formulate the four agreements which Iraqi politicians have already reached on the platform and other structures to underpin a new national unity government.