BAGHDAD (AP) — Iraq's parliament passed on Sunday a long-delayed law in a crucial step to setting up nationwide elections, which the head of the electoral commission expected would still be held in January.

The decision appeared to resolve a key sticking point — who will be allowed to vote in the disputed, oil-rich city of Kirkuk. U.S. Ambassador Christopher Hill could be seen shuttling between various political factions before the law's passage, showing Washington's concern's over the debate and whether an election delay could hold up an American troop withdrawal.

President Barack Obama, speaking at the White House, welcomed the new legislation.

"This is an important milestone as the Iraqi people continue to take responsibility for their future. I want to congratulate Iraq's leaders for reaching this agreement," Obama said. "The United States will continue to stand with Iraq as a strong partner and as a friend."

The U.S. ambassador, speaking to reporters after the vote, said the American troop drawdown will proceed as scheduled. Military commanders have said the U.S. troop withdrawal would start in earnest about 60 days after the vote, the idea being that the country would be on stable footing by then.

"What is important is that with the election law, we are very much on schedule for the drawdown," Hill said.

Under the president's plan, all U.S. combat troops will be out of the country by the end of August 2010, leaving about 50,000 trainers and support troops. Those troops would leave by the end of 2011.

The elections were originally planned for Jan. 16 and the head of the Independent High Electoral Commission, Faraj al-Haidari, said he still expected a vote within a week of that date.

"I think it will be within one week after Jan. 16," he told The Associated Press after the law was passed. The Iraqi constitution mandates that the vote takes place in January, but does not specify which day.

Deputy Parliament Speaker, Khalid al-Attiyah said it would likely be held January 21 or 23.

Once the legislation is approved by the president and his two vice presidents, the election commission will decide how many days are needed to hold the vote. Then the commission will send a letter to parliament and to the prime minister to inform them of their decision, al-Haidari said.

The law's passage had been repeatedly delayed by sharp disagreements over how voting would take place in the northern city of Kirkuk, claimed by both Arabs and Kurds and a major flashpoint in the country.