The pact was signed by Iraq's Foreign Minister Hoshyar Zebari and U.S. ambassador Ryan Crocker at a ceremony ending months of negotiations on the future of the U.S. presence, Reuters reported.
The deal calls for the United States to withdraw its forces by the end of 2011, some eight years after the invasion that ousted Saddam Hussein. Iraqi negotiators consider the firm date a victory after the Bush administration long vowed not to sign on to a defined timetable.
"Definitely, today is an historic day for Iraqi-American relations," Zebari told reporters after exchanging signed copies with Crocker.
The two men also signed a long-term strategic framework, which Crocker said would lay the foundation for Iraqi-U.S. relations for years to come.
"It reminds us all that, at a time when U.S. forces will continue to withdraw from Iraq in recognition of the superlative security gains over the last few years, our relationship will develop in many other important ways," Crocker said, according to Reuters.
Calling it a "complicated and tough negotiation," he said, "I think all Iraqis can be very proud of the substantial achievement."
Among the measures included in the agreement, U.S. forces must vacate Iraqi cities by June 2011, leave Iraq by the end of 2011 and grant Iraqi authorities more power of the operations of the U.S. mission. It also gives Iraq the right to try U.S. soldiers and defense contractors in the case of serious crimes committed off-duty and off-base, the Associated Press reported.
The deal would replace a U.N. mandate governing the U.S. presence in Iraq that expires Dec. 31.
More than two-thirds of the 275-seat legislature attended Monday's session, raising hopes that parliament will be able to muster a quorum for a Nov. 24 vote. The session ended after the agreement's text was read to lawmakers, the first step to adopt legislation.
Lawmakers are expected to meet again on Tuesday.
After sealing the approval of the Cabinet, political parties in Prime Minister Nouri al-Maliki's coalition government are expected to have similar success in securing parliamentary support.
The Cabinet's approval came one day after the country's most influential cleric, Grand Ayatollah Ali al-Sistani, said he would not object to the pact if approved by a majority in the legislature.
Backers of powerful Shiite cleric Muqtada al-Sadr, however, oppose the deal and the largest Sunni Arab bloc, the Accordance Front, says it should be put to the public in a referendum, according to Reuters.