The Iraqi parliament has passed legislation allowing former officials from Saddam Hussein's Baath party to return to public life.
The US had been urging Iraq's Shia-led government to approve the move in a bid to reach out to minority Sunni Arabs.
It will allow thousands of former party members to apply for reinstatement in the civil service and military.
The new law was passed as US President George W Bush, who is in the Gulf, said hope was returning to Iraq.
Now they have to find a way to get all the experts and bureaucrats who either fled or are in hiding to come back and help repair Iraq. De-Baathification and the disbanding of the Iraqi military were two major mistakes made early on by the US government. The Baath party may have been heinous, and it may have provided for the rise of the tyrant Saddam Hussein, but the loss of officials from the previous government not only created a power vacuum but left the US with few experienced politicians to work with.