The Iraqi shrine city of Najaf, whose mediaeval-style alleyways host millions of Shiite pilgrims every year, has signed a deal for a monorail to rival that of ultra-modern Dubai, a provincial official said on Sunday.

The city, which is home to the grand ayatollahs who wield huge influence among Iraq's Shiite majority community, will be the first in the country to get a rapid transit system, with proposals for a Baghdad metro still very much on the drawing board.

The monorail will ferry pilgrims between Najaf's most revered shrines, the Mausoleum of Imam Ali in the city centre and the Grand and Al-Sahla Mosques in Kufa, 10 kilometres (six miles) to the west, provincial investment committee member Anwar al-Habubi told AFP.

The system, which is due for completion within three years, will also provide links to the city's two main bus stations, he added.

In a later phase of the project, the provincial council plans to connect the network to the city's international airport, opened two years ago to serve the tens of thousands of Shiite pilgrims who travel from Iran, Lebanon, south Asia and elsewhere.

The monorail will run at an elevation of six metres (20 feet) above the city's streets, Habubi said. The network, much of which will be twin-track, will have a combined length of 37 kilometres (23 miles).

Canada-based international engineering consortium TransGlobim International Inc is to build the 248-million-dollar system, which is scheduled for completion within three years, Habubi added.

"Construction will start right away as the project already has its investment licence," he said.

Globim said on its website that the project entailed financing and operating the network over a 30-year concession period as well as the survey, design and construction work.

"Guideway design will accommodate blast protection," the firm said on its website referring to the concrete track and supports which carry the monorail.

Protection against bomb blasts is an important consideration in a city where Shiite pilgrims have come under repeated attack by Sunni extremists, including militants from Al-Qaeda.

"All guideway components will be pre-cast and assembled on site," the company added.

It said construction would take two years after completion of the survey and design work.

Service frequency on the network will vary in accordance with the rhythm of the pilgrimage traffic. In total, Najaf welcomes around 70 million faithful to its holy places every year but the numbers fluctuate widely from day to day.

"Currently, Najaf hosts more than 5,000 visitors per day Saturday to Wednesday peaking to 20,000 visitors per day on the weekend -- Thursday/Friday," the company said.

"On 20 major nights of the year, the city is host to over one million people per day.

"Initially (there will be) five to six minute headway between trains, moving to two to three minutes in heavy usage periods," the company said.

"Train capacity will be 400 to 420 people per train travelling 35 to 80 kilometres per hour (22 to 50 miles per hour) depending on station distance."

Habubi hailed the signing of the monorail deal.

"It is a big asset for Najaf -- it will provide an important service for pilgrims and ease the massive congestion problems," he said.

Currently the only other monorail system in the Middle East is in Dubai. The line, which opened last year, links the mainland to the man-made island of Palm Jumeirah -- a residential and leisure mega-project off the coast in the Gulf.