As they began talks in the northern city of Erbil on creating a power-sharing government, car bombs exploded in two of the country's holiest cities killing 14 people, a reminder of the government's failure to quell violence.
At least 150 people have been killed in shootings and bomb blasts in the last week. The Prime Minister, Nouri al-Maliki, is likely to keep his job in a new government while his rival Ayad Allawi, whose al-Iraqiya Party won the most seats in the election eight months ago, appears to have miscalculated his political strength.
In rejecting early compromise proposals, Mr Allawi gave Mr Maliki little choice but to seek support from Iran and revive his alliance with Shia religious parties, notably the followers of the Shia cleric Moqtada al-Sadr.
"The big winners inside the country are the Sadrists and the Kurds and the losers are the Sunni," said the Iraqi political scientist and commentator Ghassan Attiyah. "Outside Iraq the winners are Iran and Syria and the losers are the US and Saudi Arabia."
US influence in Iraq is fast diminishing and President Barack Obama evidently intends the remaining 50,000 American troops in Iraq to be withdrawn without trouble.
The meeting of the leaders of the main political blocs in Erbil begins three days of negotiations continuing today in Baghdad. These will end with the session of the Iraqi parliament on Thursday that will try to select a Speaker. Al-Iraqiya is still formally rejecting Mr Maliki as Prime Minister, but the party is beginning to fragment with as many as 40 of its 91 MPs willing to accept him. Few al-Iraqiya MPs say they are willing to follow Mr Allawi into opposition. The problem for Mr Allawi, Prime Minister of Iraq in 2004-5, was that, although al-Iraqiya won 91 seats against 89 for Mr Maliki's State of Law Party, his success was something of a mirage. Though Mr Allawi is a secular Shia, his voters were mostly Sunni and his party only came top in the polls because the Shia alliance, that previously ruled Iraq in coalition with the Kurds, was split.
In the months since the election, Mr Allawi's political position has grown weaker as Mr Maliki succeeded in conciliating many who were previously his political opponents. Showing political flexibility, Iran and Syria finally came to accept he should remain Prime Minister as did the Kurds with whom he was previously at loggerheads.
The US failed to mediate an agreement between Mr Maliki and Mr Allawi. Saudi Arabia tried to rally the Sunni Arabs but it was never in a position to mediate because Saudi leaders refused to speak to Mr Maliki or reach an accommodation with Iran and Syria.
Turkey, which has growing influence in Iraq, has been more successful in helping create a new government.
The new government is likely to be weaker than Mr Maliki's first administration that has been in power since 2006. Many of his difficulties sprang from what other Iraqi political leaders saw as his tendency to monopolise power. These misgivings were shared by Iran and Syria.
This distrust is likely to continue and the Kurds and the Sadrists will want to ensure that they have a share in deciding who should get what jobs in government, particularly in the army, police and intelligence. A new power-sharing government under Mr Maliki will in fact mean the fragmentation of power and greater difficulty in making decisions.
Mr Maliki will have to give a number of top jobs to al-Iraqiya in order to prevent the Sunni community feeling marginalised and disappointed as it watches its apparent political triumph in the March election evaporate.
One solution would be to create a national security council on which members of Iraqiya would be well represented, but whose authority could be more apparent than real. If the Sunni, a fifth of Iraq's population, do not get what they want there is unlikely to be a sectarian civil war such as that which raged in 2005-7. The Sunni were largely defeated then and may be unable to stage a new uprising. But the failure of the Sunni to get a share in power will increase their sense of alienation and expand the pool of support for groups such as al-Qa'ida. The prolonged failure to form a government has discredited politicians in Iraq and reinforced the belief that they are primarily interested in making money for themselves.
The struggle for power
Al-Iraqiya (Iraqi National Movement)
91 seats
Five years ago, Iyad Allawi headed a government attacked as corrupt. His success in the 2010 elections was down to the support of Sunni Arabs. Though he is a Shia, the Sunni see him as non-sectarian in contrast to the other two main coalitions dominated by Shia religious parties. Mr Allawi is backed by Sunni Arab states.
Iraqi National Alliance
70 seats
The largest Shia party in the INA is led by Muqtada al-Sadr. His Mehdi Army militia killed thousands of Sunnis in 2006-07. The INA has dropped its opposition to Mr Maliki as prime minister.
Kurdish Alliance
43 seats
Masoud Barzani remains the standard-bearer of Kurdish nationalism in Iraq. The Kurds have been at odds with Mr Maliki. He resisted demands for districts they regard as Kurdish.
State of Law Party
89 seats
Nouri al-Maliki does not get on with his great rival. His party’s media have described Mr Allawi as a CIA puppet, and not even properly Iraqi because of his Lebanese mother. Although he is the head of the largest Shia party, Mr Maliki’s position has been weakened by disputes with potential coalition makers.
The deadlock since March election
March
More than 60 per cent of Iraqis vote in parliamentary elections, right. No coalition manages to win majority and no new government is declared. Former prime minister Iyad Allawi and incumbent Nouri al-Maliki begin talks on forming a new government – without success.
April
Amnesty International says political uncertainty has led to upsurge in violence.
May
Across Iraq, more than 125 people are killed and more than 300 people injured in a series of suicide attacks and shootings in Basra, Baghdad, and the nearby town of Hilla.
August
Iraq's most senior military commander warns that the Iraqi army is not ready to take over from American troops, as the final full US combat brigade withdraws from Iraq. Mr Maliki angers Mr Allawi's political bloc by making sectarian comments in an interview, resulting in the suspension of talks on forming a new government.
October
Gunmen with links to an Iraqi al-Qa'ida group seize hostages during Sunday mass at a Baghdad church. Security forces manage to free approximately 100 Iraqi Catholics in a raid, but around 52 hostages and police are killed and 67 wounded.
