At issue is the composition of a planned US occupation government that will rule in the short term and the make-up of the Iraqi Interim Authoritythat will follow and a possible role for the United Nations, the officials said.

The dispute began as a squabble over humanitarian aid to Iraq but has grown and is complicating plans to set up a functioning interim authority quickly, said the officials, who spoke to AFP on condition of anonymity.

While careful not to imply that the split would hamper the US-led war effort or the long-term aim of returning Iraq to its people, the officials said traditional inter-agency rivalry had been exacerbated by uncertainty of the situation on the ground as the war rages on.

"All this stuff has become a hugely complicated and a bitterly fought thing," said one senior official.

"There is quite a lot of unhappiness between State and Defense right now, no question about it."

The interim authority is potentially the most divisive. Defense Secretary Donald Rumsfeld has suggested the immediate creation of an IIA, at least in the south, that would draw heavily from the ranks of the exiled Iraqi opposition.

Secretary of State Colin Powell, joined by the intelligence community, fears this would alienate the indigenous population and ruin efforts to repair badly damaged ties with Europe and the Arab world, they said.

Rumsfeld's suggestion -- in which he argued that exiles are better equipped to govern because of their experience living in the West, according to officials familiar with the proposal -- was delivered to the White House on Wednesday.

At the time, Powell was in Europe trying to build support from anti-war Europe by pledging an "important" coordination role for the United Nations and others in the transition.

The officials said Powell was angered when he learned of Rumsfeld's plan and that on his way back to Washington on Thursday he called the National Security Council (NSC) to argue against it.

"Powell got pretty grumpy on the way home yesterday about these ideas," the official said. "He is really leaning on the NSC to try to tamp them down."

The State Department has opposed the creation of a provisional government comprised of Iraqi exiles and a senior White House official said Friday that Powell's argument may have worked to some extent.

"The establishment, and the timing for the establishment, of an IIA, depends on the realities on the ground," the official said, adding that an interim authority could be formed before the war is over.

"One thing that is a non-starter is starting up an IIA or a provisional government composed of only Iraqi exiles," the official said.

Powell said much the same in comments to reporters at the State Department on Friday.

"We want an interim authority that is representative of all the groups that have an interest in the future of Iraq," he said.

"We want it to include those who are in the external opposition who have worked so hard and so long and with such determination for the liberation of Iraq, but also individuals inside," Powell said.

Rumsfeld and his Pentagon planners envision an immediate occupation administration dominated by the military with minimal civilian input, while Powell, wary of the international reaction, wants a less-uniformed presence, officials said.

"I wouldn't say there's a private war going on between State and the Pentagon on this, but it's become more of a battle than a skirmish," said a second senior official.

The officials acknowledged that what had begun as a relatively minor bureaucratic struggle over control of aid distribution had grown in recent days as troops have advanced on Baghdad.

With the aid hurdle apparently overcome, attention turned to the formation of the new governing structure which sparked the new recriminations, they said.

The Pentagon has placed on hold the appointments of several current and former diplomats to serve on the team of retired general Jay Garner, who is to run the civilian side of the occupation government, the officials said.

Among those on hold are former envoys Robin Raphel, who served in Tunisia, Kenton Keith, who served in Qatar, and Barbara Bodine, who served in Yemen, the officials said.

Conservatives have made longstanding complaints that US diplomats handling the Middle East are biased in favor of Arab states.

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