The opposing encampments are the latest turn in a standoff between Iraq's rival Shiite blocs which has so far remained peaceful in the war-scarred country.

In a statement read out to thousands of supporters who had gathered on one of the main access roads to the capital's Green Zone government and diplomatic compound, the pro-Iran Coordination Framework said it would hold an "indefinite sit-in" to speed up the formation of a new government to end months of deadlock.

An AFP correspondent saw protesters begin assembling large metal tent frames in readiness to camp out.

Loyalists of Sadr, a revered Shiite cleric who once led a militia against US and Iraqi government forces, have been demanding fresh elections after the Coordination Framework named a candidate for the premiership, a post they believe should be theirs.

The Coordination Framework, an alliance that brings together the party of ex-prime minister Nuri al-Maliki, a longtime Sadr foe, and the Hashed al-Shaabi, a pro-Iran former paramilitary network now integrated into the security forces, wants a new government to be formed as quickly as possible.

A statement from the alliance demanded the "formation of a new government" that would provide public services and solutions to power outages and water shortages.

"We're here to protect the state and the constitution," said Abu Mehdi, a protest organiser from the city of Hilla, south of the capital.

"Give the Coordination Framework the chance to form a government."

- 'Lengthy struggle' -

Earlier in the day, thousands of supporters of Sadr gathered for the Muslim weekly prayers near parliament inside the normally secure Green Zone.

A week earlier, Sadr had called out tens of thousands of his followers for prayers in the area.

For nearly two weeks, his supporters have held daily sit-ins, first inside the legislature, and later on its grounds.

Their protest reflects months of failed negotiations by Iraq's political forces to form a new government after inconclusive October elections.

Outside parliament Umm Hussein, a Sadr supporter in her 50s, said she was there to protest "the regime that for 20 years has done nothing for the people, except plunder and steal public money".

"Ninety percent of the population live in poverty, in sickness, in hunger," she complained, demanding "new faces" at the helm who would "serve the people".

Sadr's supporters also rallied Friday in the southern cities of Amarah, Kut and Nasiriyah. Their rivals demonstrated in the main northern city of Mosul, AFP correspondents reported.

On Wednesday, Sadr demanded that the judiciary dissolve parliament by the end of next week, as part of his call for new elections.

To further his campaign, Sadr called on his supporters to petition the courts en masse.

Stewards handed out printed forms outside parliament on Friday, to which demonstrators only had to add their names and signatures.

The Framework had initially said they were conditionally open to new elections.

Asked what he would do if the courts rejected the petitions, 32-year-old engineer Ahmed al-Ibrahimi said: "Revolution is a lengthy struggle. Beating the retreat is not in our vocabulary.

"We will keep up our sit-in and we will maintain our demand for the overthrow of this corrupt political junta."