U.N. special envoy Lakhdar Brahimi has urged Iraqis to accept the newly-named interim Iraqi government, calling it the "best outcome" at this time to lead the nation.

Speaking in Baghdad one day after the government was sworn in, Mr. Brahimi said the ministers face many challenges in the months ahead as the country prepares to hold national elections no later than January 31, 2005. He said preparing for the election and creating the atmosphere for it are imperative for its success.

The United States and Britain Tuesday presented a new draft resolution to the U.N. Security Council that would grant Iraq's interim government full sovereignty at the end of this month.

In Brussels, U.S. Deputy Secretary of State Richard Armitage expressed confidence that most Security Council members would support the draft.

Meanwhile, Iraqi police say a car bomb exploded in Baghdad Wednesday, killing at least two people and wounding about 20 others.

In the holy city of Kufa, at least three Iraqis were reported killed in clashes between U.S. forces and militants loyal to radical Shi'ite cleric Moqtada al-Sadr. The U.S. military had no immediate comment.