BAGHDAD, Iraq - A 25-member governing council of prominent Iraqis from diverse political and religious backgrounds was named at an inaugural meeting today, the first national body since the fall of Saddam Hussein and a crucial first step on the nation's path to democracy.

In its first public act, the council declared April 9 as a national holiday marking Saddam's fall from power and wiped out six dates that were celebrated under the old regime.

"The establishment of this council represents the Iraqi national will after the collapse of the dictatorial regime," said council member Mohammed Bahr al-Uloum, a prominent Shiite cleric from Najaf, announcing the new holiday.

The new Iraqi leadership sat in a semicircle of chairs on stage at a downtown Baghdad convention center, some dressed in traditional white Arab robes, some in clerical garb and some in business suits - while the top U.S. administrator in Iraq, L. Paul Bremer, and other dignitaries looked on.

The council was drawn up after more than two months of deliberations to strike a balance between the factions that make up Iraq - Sunni and Shiite, Arab and Kurd, returning exiles and local leaders. The panel will have real political muscle - with the power to name ministers and approve the 2004 budget - but final control of Iraq still rests with Bremer.

Sergio Vieira de Mello, the U.N. representative to Iraq, called the day "historic" and an important step toward returning sovereignty back to the Iraqi people.

"Iraq is moving back to where it rightfully belongs, at peace with itself and a member of the community of nations," de Mello said. He added that U.N. Secretary-General Kofi Annan promised the world body would be "here for you, in any way you wish, and for as long as you need."

Iraq's people have clamored for say in the running of their country, and several U.S. delays and backtracking fueled a common perception that the Americans were here to colonize, rather than liberate, the country.

The council has 13 Shiites, 5 Kurds, 5 Sunnis, 1 Christian and 1 Turkoman - a woman. The move is an attempt to reflect the country's diverse demographics. Shiites make up about 60 percent of Iraq's 24 million people, but they have never ruled the country.

On the panel are Iraqi National Congress leader Ahmed Chalabi, Abdel-Aziz al-Hakim, a leader of the Supreme Council for the Islamic Revolution, Massoud Barzani and Jalal Talabani, leaders of the two main Kurdish groups, and former foreign minister Adnan Pachachi.

The group, however, is dominated by lesser known Iraqis, many of whom remained in their country during Saddam's 23-year dictatorship. A Turkoman woman and an Assyrian Christian are on the list, as well as a human rights activist and a member of Iraq's Communist Party. Two women were among the panelists.

"The launch of the Governing Council will mean that Iraqis play a more central role in running their country," Bremer said in a speech on Iraqi television Saturday. "It will represent the diversity of Iraq: whether you are Shiite or Sunni, Arab or Kurd, Baghdadi or Basrawi, man or woman, you will see yourself represented in this council."

One of the council's first goals will be to convince the Iraqi people that it represents them, despite the fact they never had a chance to vote on its members. Coalition leaders say an election in Iraq is not yet practical.

The panel is meant to be the forerunner of a larger constitutional assembly that will have about a year to draft a new constitution. A senior Western diplomat has told The Associated Press that a preliminary constitutional committee is expected to be named within two to three weeks.

By mid- to late-September, the 200-250 strong Constitutional Convention is expected to take office and begin deliberations. The convention is expected to take nine months to a year to produce a draft constitution, after which Iraqis will hold a referendum to vote on the document. Free elections to pick a government are expected to follow.

Entifadh Qanbar, a spokesman for Chalabi, described the council's convening as "a positive step and a historic day for Iraq."

"The United States has no intention of colonizing Iraq and Mr. Bremer has told me personally that he will not intervene and will stay clear from political decisions made by the council," he said. Qanbar said the council members will elect a chairman, possibly later today.

In the streets, Iraqis welcomed the move.

"The formation of this council which represents all sectors of Iraqi society is the birth of democracy in the country. It is better than Saddam's government of destruction and dictatorship," said Razzak Abdul-Zahra, a 35-year-old engineer.

Others were hopeful but skeptical of U.S. intentions.

"We do not want to see this council used by the Americans as a tool to achieve their goals in Iraq," said Bassem al-Duleimi, a 22-year-old university student.

In the days after Saddam fell in April, the Americans promised a constitutional assembly would be set up within weeks. But they backed off that promise, and have revised their plans several times. The governing council was at first envisioned as a consultative panel, but Bremer later acceded to Iraqi demands that it be given real political power.

Adel Noory Mohammed, a leader of the Kurdistan Islamic Union, one of the groups represented on the council, said it is in the interests of both the Iraqis and the Americans that the council be given wide powers.

"If the Americans do not get this done quickly they will lose even more legitimacy and popularity in the eyes of the Iraqi people and they will put themselves under enormous pressure," he said. "The new government, if it is a strong government, will have the respect of the Iraqi street, and people will obey it."