al-Maliki's government.
Allawi's decision, after weeks of wavering, cleared another potential hurdle in long and contentious negotiations between Iraq's Shi'ite, Sunni and Kurdish political blocs to form a new government after an inconclusive election.
Maliki is to unveil his cabinet in parliament Monday.
The participation of Allawi and Iraqiya could help ease concern about renewed bloodshed as Iraq emerges from years of war and U.S. troops withdraw completely by the end of 2011.
Allawi, a secular Shi'ite, had wanted to unseat Shi'ite premier Maliki after his Iraqiya bloc won 91 seats in the new parliament with strong backing from Iraq's minority Sunnis. He had warned that any attempt to marginalize his coalition could reinvigorate a weakened but still lethal insurgency.
Washington and Iraq's Sunni Arab neighbors were anxious to ensure that Allawi's bloc was represented in the government.
Allawi said he would accept a job as head of a national strategic policy council that was offered in a power-sharing deal involving Maliki and Kurdish president Masoud Barzani on November 10.
"We will accept the leadership of this council based on the agreements that have occurred and have been signed between me and Mr Barzani and Mr Maliki," Allawi told a news conference. "So this is concluded. If there is any change to the agreements on power, then there will be a different story all together."
Allawi had been indecisive about joining the government after the November 10 accord between the political factions that put Maliki on course for a second term as premier. The accord also returned Kurd Jalal Talabani to the presidency and gave Sunni Osama al-Nujaifi the speaker's post in parliament. (*)