Iraq's Presidency Council on Sunday ratified a measure by parliament that clears the way for troops from Britain, Australia and a handful of other nations to stay in Iraq after a UN mandate expires at the year's end.
Iraq's parliament gave approval to the measure on Tuesday.
Forces from Britain, which has 4,100 soldiers in Iraq, Australia, El Salvador, Romania and Estonia and from NATO have been awaiting a new arrangement to legalise their presence next year.
Iraq's three-member Presidency Council, comprising President Jalal Talabani and his two vice presidents, must unanimously approve all legislation passed by parliament or it goes back.
A council statement said Prime Minister Nuri al-Maliki's cabinet had "authorisation to determine the presence of (non-US) foreign troops".
But British officials have warned that several negotiating steps are needed before Britain and other nations can secure final deals permitting their presence after Dec. 31.