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imageBAGHDAD: Iraq's divisive premier Nuri al-Maliki dropped his bid to stay in power Thursday, bowing to huge domestic and international pressure as a militant offensive threatens to tear the country apart.

The two-term premier threw in the towel after an acrimonious political battle and backed his designated successor Haidar al-Abadi, a fellow member of the Shiite party Dawa.

"I announce before you today... the withdrawal of my candidacy in favour of the brother Doctor Haidar al-Abadi," he said in a televised address, with Abadi standing next to him.

His decision was swiftly welcomed by the US and the UN.

"Today, Iraqis took another major step forward in uniting their country," US National Security Advisor Susan Rice said in a statement.

UN Secretary-General Ban Ki-moon said Maliki's withdrawal "will allow the crucial process to form a new government to proceed swiftly and within the time frame provided for in the constitution."

He urged the formation of "an inclusive, broad-based government ready to immediately tackle these pressing issues."

Maliki, 64, turned the page on eight years that saw him rise from the relative anonymity of a former exile who returned in the wake of the 2003 US-led invasion to become a feared and powerful ruler.

Quelling fears a desperate bid to cling to power could worsen what is already Iraq's worst crisis in years, Maliki said he was stepping aside to "facilitate the progress of the political process and the formation of the new government."

He defended his record at the helm but critics say his sectarian policies have alienated and radicalised the Sunni minority, most of whose heartland was overrun by extremist Islamic State fighters facing little or no popular resistance two months ago.

The militant group has since declared a "caliphate" straddling Syria and Iraq, hunted down religious minorities, destroyed holy sites, seized the country's largest dam and several oil fields.

The devastating militant advance has also displaced hundreds of thousands of people and posed an immediate existential threat to the world's seventh oil producer by de facto redrawing its borders along ethnic and sectarian lines.

Iraqi forces completely folded when IS forces moved in and while the Kurdish peshmerga initially fared better, the US arms that retreating federal troops left behind made the militants a formidable foe.

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