More than 1,100 Iraqis convened Sunday for the start of a conference aimed at selecting a national assembly, a milestone in the country's transition to democracy, but the high-security meeting was roiled by a dispute over the use of military force to confront militiamen loyal to a rebellious Shiite Muslim cleric.

In a remarkable scene of political activism that would have been unimaginable under Baath Party rule, dozens of Shiite delegates jumped to their feet in a loud protest of the interim government's decision to mount military operations to evict followers of the cleric, Moqtada Sadr, from a Shiite shrine in the holy city of Najaf. Chanting "Yes to Najaf!" and raising their fists, the Shiite dissenters demanded that the participants call on the interim prime minister and Sadr's followers to refrain from violence and for a special committee of delegates to negotiate a solution to the crisis.

The outburst triggered a succession of events that quickly reshaped government policy toward Najaf and instilled the first measure of checks-and-balances in Iraq's nascent political system. The Shiite protesters, along with several non-Shiite participants, caucused and drafted a letter to interim Prime Minister Ayad Allawi and his cabinet that called for a dialogue with Sadr and "an immediate cease-fire and cessation of all military activities in Najaf and other Iraqi cities."

A four-person delegation from the conference then met with Allawi. When the meeting was over, the government announced that its plans to use force to expel Sadr from the Imam Ali shrine were on hold. In a reversal from its position a day earlier, Allawi's cabinet issued a statement pledging to refrain from military action against Sadr's militiamen and to keep an "open door" to a negotiated settlement.

"This is democracy in action," said Ibrahim Nawar, a U.N. adviser who helped organize the conference. "For now, at least, they have succeeded in changing the government's approach toward the situation in Najaf."

Although senior officials said units from the Iraqi army would still be deployed to Najaf to prepare for an assault on the shrine should Sadr not withdraw, they acknowledged their strategy had shifted. "We're going to give time for a peaceful solution," said Wael Abdul-Latif, the minister of state for provincial affairs.

Shortly after the Shiite protest, a half-dozen mortar rounds landed near the heavily fortified conference center, killing two people and wounding 17 others at a nearby transportation depot, where three buses were reduced to charred hulks. The meeting was not interrupted, but the attack pierced an extraordinary security umbrella that involved curfews in nearby neighborhoods and numerous vehicle checkpoints.

The Shiite protest over Najaf provided a window into the chaotic fervor with which Iraqis are embracing democracy. Through their demands of Allawi, the delegates started to create a balance of power in the political system, even before winnowing themselves into a 100-member national assembly. But the protest also revealed the degree of Sadr's influence and the extent to which Iraqi society remains riven by differences that could impede its democratic transition.

Speaker after speaker rose to condemn the use of force against Sadr and his militiamen. "What is happening in Najaf is much more important than this conference and demands our immediate attention," one man intoned. Another likened the tactics used by U.S. and Iraqi security forces to those employed by the military under Saddam Hussein's government to crush Shiite dissent. A woman rose to criticize Sadr, saying "it is not American cannons" that are responsible for the bloodshed there, but was shouted down.

Members of the interim government have maintained that few Iraqis endorse Sadr's lawlessness and that many back Allawi's tough tactics to restore order in this strife-torn country. But the delegates, who are supposed to represent Iraq's 25 million people, took a more nuanced approach to the standoff in Najaf, where scores of fighters from Sadr's Mahdi Army militia have been holed up in the Imam Ali shrine. Despite strong support for aggressive action to combat criminals and insurgents, many of the conference participants -- not just Shiites, but rival Sunnis as well -- rejected the idea of using force to liberate the shrine and apprehend Sadr, who is a descendant of the prophet Muhammad.

"We want the immediate stoppage of bloodshed in Najaf," said Hussein Mohammed Hadi Sadr, a Shiite cleric who is a distant relative of Moqtada Sadr and served as the conference's chief emissary to the prime minister. "It is a holy place. We should not fight there. The language of dialogue should be the overruling language."

Others were more blunt. "How can we have a conference if we have a war in Najaf?" growled Nadim Jabbari, the leader of a small Shiite party in Baghdad. "We must solve that problem first."

Solving that problem delayed other business at the conference. The delegates are supposed to select a 100-member interim national assembly by Tuesday. By the end of the day Sunday, they had not even agreed on the rules by which members would be elected. The organizers want delegates to vote on slates of 81 candidates -- 19 members of the former U.S.-appointed Governing Council have been guaranteed seats -- but some participants, particularly those who are political independents, say they believe that method favors political parties and instead want assembly members to be elected individually.

The assembly, which will have the authority to veto decisions issued by Allawi's cabinet, will be replaced after national elections are held. Those elections are scheduled for January.

The conference had been postponed for two weeks to attract more participants. It was supposed to be limited to 1,000 members, but political advisers from the United Nations asked organizers to invite 300 additional people, many of them from religious and ethnic groups that were deemed underrepresented. More than 1,100 of the 1,300 attended on Sunday, said Fouad Masoum, the conference chairman.

"Your blessed gathering here is a challenge to the forces of evil and tyranny that want to destroy this country," Allawi told participants in an opening address. He called the gathering a "first step that will open up horizons of dialogue" and serve as "an example for democracy and freedom" in the Middle East.

But it was Allawi's vow last week that he would not negotiate with Sadr that resonated even more profoundly at the conference. Abdul-Latif, the minister of state for provincial affairs, said that the government had repeatedly asked Sadr to withdraw his militia from the shrine. Abdul-Latif also noted that Allawi's national security adviser recently traveled to Najaf to negotiate, but Sadr would not meet with him.

Abdul-Latif said the government would give Sadr "reasonable time" but not an indefinite period. If the militiamen do not vacate soon, he said, "we will pursue them."

Conference organizers said a group of delegates would travel to Najaf, perhaps as early as Monday, to try to persuade Sadr and his militia to withdraw from the shrine and lay down their weapons.

In his opening address, President Ghazi Yawar urged the delegates to "achieve national consensus and agreement."

Ashraf Jehangir Qazi, a former Pakistani ambassador to Washington who is serving as U.N. Secretary General Kofi Annan's special representative in Iraq, told delegates that the gathering was "a critical milestone on the path toward a goal shared by all Iraqis -- the goal of seeing their beloved country become a stable, pluralistic and inclusive democracy." He insisted that strife could not be addressed "through security measures alone. They require political consensus-building, rehabilitation measures and the promotion of the rule of law."

Iraqis at a forum aimed at selecting a national assembly vote to send a team to Najaf to negotiate an end to the crisis.Interim Prime Minister Ayad Allawi, right, greets Ahmed Shyaa Barak, a former member of Iraq's Governing Council, at the conference in Baghdad.