IRAQ'S parliament has failed to break a damaging political deadlock which is holding up the formation of new government to tackle an Islamist-led insurgency raging fewer than 50 miles from Baghdad.

After a brief session, parliamentary officials delayed until tomorrow their efforts to reach agreement among the country's Shi'ite, Sunni and Kurdish politicians on the posts of prime minister, president and parliamentary speaker.

Prime Minister Nuri al Maliki, whose State of Law coalition is the largest individual list in parliament, is seeking a third term but faces opposition from Sunnis and Kurds who say he has ruled for the Shi'ite majority at the expense of minority communities. Even rival Shi'ite parties wish to unseat Mr Maliki.

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The political impasse has been given added urgency by the Islamist-led insurgency which swept through Sunni provinces of northern Iraq last month and was only stemmed within a hundred miles from the capital.

Sunni Islamist insurgents who control large parts of northern Iraq attacked a town north of Baghdad early yesterday, seizing local government buildings, police and witnesses said.

Meanwhile, gunmen have killed at least 33 people, including 29 women, in a raid on two buildings in a housing complex in Baghdad. The motive behind the killings was not immediately clear.