The former militia leader reached a coalition agreement on Thursday with Shiite Ammar al-Hakim's Al-Hikma list and the secular outgoing vice-president Iyad Allawi, whose list was comprised largely of Sunnis.

Sadr's move comes after parliament voted on Wednesday for a manual recount, cancelled expatriates' votes and sacked the electoral commission, amid mounting allegations of fraud surrounding the May 12 poll.

His strengthened bloc gives Sadr around 100 seats, but not enough to generate a majority in the 329 seat parliament.

Iraq's political system is designed to ensure that no one person or party can dominate, leading to extended post-election horse trading between multiple factions -- a process that hasn't been interrupted by the order for a recount.

Sadr's enhanced bloc is calling for economic reform and decentralisation. It also says it opposes "politicising administrative and military institutions".

Iran-backed parliamentary rivals could nullify Sadr, who has called for his country to be more independent from both Iran and the US.

When initial results were announced, influential Iranian General Ghassem Soleimani came to Baghdad in a bid to rally rival Shiite factions against Sadr.

Soleimani met outgoing Prime Minister Haider al-Abadi, whose list secured 42 seats, former anti-jihadist fighters from the paramilitary Hashed al-Shaabi units (47 seats) and former prime minister Nuri al-Maliki (26 seats).

If these groups form an alliance, they would take 115 seats -- enough to form a government, according to Iraq's Constitution.

Meanwhile "logistical preparations" for the manual recount have begun at the electoral commission's headquarters, Iraq's Superior Council of Magistracy said.

The electoral commission has been dismissed and some members may face fraud charges, authorities have warned.

The commission says it will take legal action to challenge the decision to dismiss it.