The results from Baghdad - where Mr Allawi was expected to do well - show the one-time CIA protege with only 140,364 votes compared to 350,069 for the alliance, which is headed by a Shia cleric who lived in Iran for many years.
Among the mostly five Shia provinces tallied so far, the alliance's lead is even wider. It has 1.1 million of the 1.6 million votes counted at 10 per cent of polling centres in the capital and the Shia south. Mr Allawi's list was second with 360,500.
"Large numbers of Shia voted along sectarian lines," said Sharif Ali bin Hussein, head of the Constitutional Monarchy Party. "Americans are in for a shock. A lot of people in the country are going to wake up in shock."
Safwat Rashid, a member of Iraq's Independent Election Commission, and international poll officials warned observers not to read too much into the numbers, which did not include Sunni or Kurdish provinces.
The list of Ayatollah Sistani, who did not run for election, had been expected to do extremely well. It remains to be seen, however, whether it will obtain more than 50 per cent of the seats in the 275-member parliament.
Mr Rashid said the vote total would not be known for another 10 days, although numbers from polling the Iraqi diaspora abroad had been ratified. About 170,000 ballots were cast, with 44 per cent voting for the Sistani list, 18 per cent for the Kurdish list, 12 per cent for Mr Allawi's list and 8 per cent for the main Christian Iraqi list.
Mr Rashid said the Baghdad numbers came from "mixed" neighbourhoods. Many analysts have concluded that Mr Allawi performed so poorly there and other parts of the Shia south, where he hoped to make a stronger second- place showing, that he has little chance of working his way back as prime minister. Given the extent to which the US and Britain built up Mr Allawi, his removal would be seen as a serious blow.
Leaders of the alliance list - which ran a vociferous grassroots campaign aided by mosques and the blessing of the revered Ayatollah Sistani - were celebrating their prospects, predicting they would win the 138- seat majority necessary to ratify a cabinet. "I think we are almost there and even more," said Adnan Ali al-Kadhimi, who is deputy chief of staff for Ibrahim al-Jaffari, the number two candidate on the alliance list and leader of the Dawa Party.
Mr Kadhimi said the alliance would insist that one of its members become prime minister, arguing that Mr Allawi had been invited to join it months ago but declined in order to create his own coalition. "[Mr Allawi] had his chance," he said.
The alliance would try to quell the country's violent Sunni-led insurgency by improving services, he said. "If we can win the heart of the people the people will be in support of the government. "Maybe they can provide information and help to surround and isolate the insurgents."
w An ambush on a road near Baghdad yesterday killed two policemen, wounded 14 and left at least 16 missing on the worst day of violence since last Sunday's election.Reuse content