US and UK leaders have hailed the unanimous vote at the UN Security Council on Iraq as proof the world stands behind their plans.
Militants seeking to disrupt the peace process in Iraq now faced the opposition of a "united world", UK Prime Minister Tony Blair said.
US President George W Bush said the UN vote marked a "great victory" for Iraq.
The resolution submitted by the US and UK formalises ties between Iraq's future government and foreign forces.
It was adopted after many revisions by the 15-member Security Council, where opposition to the US-led invasion of Iraq has been strong.
Resolution 1546 sets out the powers and constraints for the new interim Iraqi government, due to take power from the US administration on 30 June.
Iraqi Foreign Minister Hoshyar Zebari said in New York that the resolution put an end to "occupation".
"The significance of this resolution for us, for the Iraqis, is really to take away the concept of occupation," he said.
In other developments:
Clashes between US forces and Iraqi militants at Karma, outside the Sunni city of Falluja, leave at least four Iraqis dead
Three Italian hostages return from Iraq to a hero's welcome in Italy, about six weeks after a fourth Italian was beheaded by the captors
Polish Deputy Defence Minister Janusz Zemke says six European soldiers killed at Suwaira on Tuesday were probably hit in a mortar attack
'A good resolution'
Mr Blair described the resolution as "a milestone for the new Iraq," but the French ambassador to the UN, Jean-Marc De Sabliere, struck a more cautious note.
Sets 30 June 2004 as date for end of occupation and dissolution of the Coalition Provisional Authority
Envisages direct democratic elections to a Transitional National Assembly no later than 31 January 2005
Provides for "full partnership between Iraqi forces and the multinational force"
Acknowledges need to confer on "sensitive offensive operations"
Firmly places Iraqi security forces under Iraqi control
"It is now a good resolution and the decision taken today by the Council is important," he said.
It was now "up to the Iraqi government to win the confidence of the Iraqi people", he added.
Russian President Vladimir Putin said the resolution was "a major step forward" for the Iraqi people.
The German ambassador to the UN, Gunter Pleuger, said the resolution was an "important step towards the restoration of full sovereignty" for Iraq.
He stressed that German support had depended on the partnership between the future Iraqi government and the US-led multinational force being clarified.
The BBC's Susannah Price reports from the UN that there is an atmosphere of relief at the Security Council about the unanimous agreement.
UN Secretary General Kofi Annan said he detected a "genuine expression of the will of the international community... to come together again after last year's divisions" and Iraqis to resume control of their own political destiny.
The Americans and British are now waiting to see the response to the resolution's call for more countries to join the multinational force.
The US ambassador to the UN, John Negroponte, said international assistance would enhance the Iraqis' prospects for success and there were plans to set up a separate force, still under American command, specifically to protect UN personnel.
Washington and London hope countries unwilling to engage in direct fighting against Iraqis might be persuaded to join, our correspondent notes.
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World Leaders Hail Deal on Iraq
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