Jawad al-Maliki was tasked to form a coalition government by Iraqi leaders on Saturday, ending a four-month political deadlock. "We are going to form a family that will not be based on sectarian or ethnic backgrounds," Maliki told reporters.
But in his first policy speech, Maliki called for Iraq's powerful militias to be merged with US-trained security forces - an explosive issue in the country because militias are tied to political parties and operate along religious lines.
"Arms should be in the hands of the government. There is a law that calls for the merging of militias with the armed forces," said Maliki, nominated by the ruling Shia Alliance.
The United States hopes a national unity government will foster stability in Iraq and enable it to start bringing home its more than 130,000 troops.
"This is a good day for Iraq. It is an important day for Iraq," US secretary of state Condoleezza Rice said in a conference call with reporters in Washington. "This is someone with whom we can work."
Five US soldiers were killed by a roadside bomb south of Baghdad on Saturday, the US military said in a statement. A total of 2,385 US soldiers have been killed in Iraq since the March 2003 US-led invasion to topple Saddam Hussein.
The Shia Alliance chose Maliki after its original candidate, interim Prime Minister Ibrahim al-Jaafari, bowed out. Other parties opposed Jaafari on grounds he was too weak. Iraqi President Jalal Talabani formally designated Maliki as prime minister after a breakthrough in negotiations on Friday and asked him to form Iraq's first full-term government since Saddam was ousted in 2003.
Earlier, parliament re-elected Talabani as president.
Mahmoud al-Mashhadani was elected as parliamentary speaker.