Prime Minister Nouri Maliki's alliance won last month's parliamentary elections in Iraq, but fell short of a majority, preliminary results show.
The electoral commission said State of Law had taken 92 of the 328 seats in the Council of Representatives.
Its two main Shia rivals, Ammar al-Hakim's Muwatin and the Ahrar movement loyal to Moqtada al-Sadr, followed with a combined 57 seats.
Mr Maliki wants a third term, but other parties have voiced strong opposition.
They blame him for the sectarian violence that has left more than 3,500 people dead this year, and accuse him of trying to monopolise power.
He blames external factors like the conflict in Syria for exacerbating the violence, and his opponents for the current political stalemate.
More than 9,000 candidates and 276 political entities contested the elections on 30 April, the first since the withdrawal of US troops in 2011.
On Monday, the Independent High Electoral Commission (IHEC) announced that 62% of the 22 million eligible voters had cast ballots.
The preliminary results showed State of Law in the lead in 10 of the 18 provinces, with a combined total of 92 seats, followed by Muwatin with 29 and Ahrar with 28. Two smaller parties of Sadr supporters won six seats.
The Mutahidoun bloc led by the Sunni Arab Speaker of Parliament, Osama al-Nujaifi, ended up with 23 seats, former Prime Minister Iyad Allawi's Wataniya list won 21, and Sunni Arab Deputy Prime Minister Saleh al-Mutlaq's Arabiya list got 10 seats.
The UN special representative for Iraq, Nickolay Mladenov, welcomed Monday's announcement.
"As the people of Iraq have now spoken, I call upon all elected representatives to work together for the future of Iraq," he said.
The US embassy in Baghdad said the election was "a testament to the courage and resilience of the Iraqi people, and another milestone in the democratic development of Iraq".
The election was considered credible, but state-run Iraqiya TV quoted the chairman of the IHEC as saying on Monday that it had annulled the results of 300 polling stations for reported violations, and that more than 1,000 electoral workers had been dismissed for ballot rigging.
There was also no voting in a third of the western province of Anbar, where Sunni tribesmen and militants linked to the jihadist Islamic State in Iraq and the Levant (ISIS) control the city of Falluja and parts of Ramadi.
Negotiations over the formation of a new coalition government are likely to take some time. It took nearly 10 months after the last election in 2010.
The results boost Mr Maliki's chances of a new term as prime minister, but he faces opposition from the predominantly Sunni Arab west of Iraq and the Kurdish north. His Shia rivals have also rejected his candidacy.
"Maliki's position is strong," former national security adviser Mowaffak al-Rubaie, a candidate for State of Law, told the Reuters news agency.
Emphasising the prime minister's experience as commander-in-chief, he added: "Because of Syria and regional polarisation, security will be very important for the next four years."
Under the constitution, the president must ask parliament to convene 15 days after the final results are announced. Deputies will then choose not only a new prime minister but also a president and speaker of parliament.