Protesters have hit the streets since early October in the largest grassroots movement Iraq has seen in decades, sparked by fury at poor public services, lack of jobs and endemic government graft.

The decentralised demonstrations were met with violence from security forces and armed groups, leaving more than 420 people dead and 15,000 wounded according to an AFP tally compiled from medics and an Iraqi rights commission.

The toll spiked dramatically this week, when a crackdown by security forces left dozens dead in Baghdad, the Shiite shrine city of Najaf and the southern hotspot of Nasiriyah -- the birthplace of Prime Minister Adel Abdel Mahdi.

Facing pressure from the street and the country's top Shiite cleric Grand Ayatollah Ali Sistani, Abdel Mahdi announced on Friday that he would submit his resignation to parliament, due to meet on Sunday.

But demonstrations have not subsided, with crowds in the capital and across the Shiite-majority south sticking to their weeks-long demand of complete regime change.

"We'll keep up this movement," said one protester in the southern hotspot of Diwaniyah, where thousands turned out early on Saturday.

"Abdel Mahdi's resignation is only the first step, and now all corrupt figures must be removed and judged," he said.

- 'We won't leave' -

Teenager protesters also held their ground in Baghdad, staring down security forces positioned behind concrete barriers to protect government buildings.

"We won't leave our barricades until the regime falls, until we get jobs, water, electricity," one protester said.

Hundreds also converged in the main protest camp in Nasiriyah's city centre and set tyres ablaze on three bridges spanning the Euphrates River, according to AFP's correspondent.

Iraq's second holy city Karbala was rocked by overnight clashes with young protesters and security forces trading fire bombs until the early hours of the morning.

Najaf was relatively calm on Saturday, according to AFP's correspondent, but protests there usually swell in the afternoon and evening.

This week's stunning turnaround was set off when protesters stormed and burned the Iranian consulate in Najaf late Wednesday, accusing Iraq's neighbour of propping up the Baghdad government.

Tehran demanded Iraq take decisive action against the protesters and hours later Abdel Mahdi ordered military chiefs to "impose security and restore order".

Men in civilian clothes opened fire on demonstrators and tribal fighters deployed in the streets to defend them in standoffs that sparked fears of widespread clashes.

Over two days, 42 people were shot dead in Nasiriyah, 22 in Najaf and three in Baghdad.

Iraq's Supreme Judicial Council on Saturday said it had formed a committee to probe the unrest, pledging to "punish those who attacked protesters".

Chief justice Faeq Zeidan is among a list of names circulated as possible replacements for Abdel Mahdi.

- Sistani's switch -

Accountability for those killed has become a key demand of protesters in Iraq, where tribal traditions -- including revenge for murder -- remain popular.

"Every victim has a mother, a father, a tribe who won't stay quiet," said a Baghdad protester.

"Otherwise there could be civil war."

The rising death toll sparked a dramatic intervention from Sistani, the 89-year-old spiritual leader of many of Iraq's Shiites.

For week he called for restraint and urged parties to get "serious" about reform, ramping up his rhetoric on Friday when he urged parliament to end its support for the government.

Within minutes, leading political factions called for a vote of no-confidence, including one of the government's key sponsors, the Saeroon parliamentary bloc led by firebrand cleric Moqtada Sadr.

Abdel Mahdi's other main backer, the Fatah bloc, called for "the necessary changes in the interests of Iraq" in a departure from its usual statements of support for him.

By Friday afternoon, Abdel Mahdi announced he would submit a formal letter to parliament "requesting my resignation" in keeping with Sistani's wishes.

He held an extraordinary cabinet session Saturday on his resignation, during which ministers also approved his chief of staff stepping down.

Parliament is due to meet Sunday and if it passes a no-confidence vote, the cabinet would remain in place as caretakers until the president names a new premier.

Iraq's constitution does not include a provision for the resignation of the premier, so submitting a letter to parliament would trigger a no-confidence vote.

The bloodshed this week sparked criticism from the United Nations, which said the deaths "cannot be tolerated."

Its top official Jeanine Hennis-Plasschaert met Abdel Mahdi on Saturday but there were no details on the talks.