Phone lines were battered during the recent war

The coalition said the move follows demands from Iraqi businessmen who insisted a nationwide mobile network was needed to rehabilitate the economy.

Reports have suggested half the land lines in Iraq are still down because of war damage and subsequent looting at the telephone main exchanges.

The decision marks a U-turn for the coalition, which had initially said it would leave decisions about a mobile phone network to the future government.

But it said establishing mobile services now would help get Iraq back on its feet.

Lucrative market

Iraq could prove a lucrative market for the mobile phone industry.

It is the biggest growth market in the region in the coming three or four years Naguib Sawiris, Orascom Telecom

Karim Qader, a senior Iraqi engineer with Asia Cell - the operator in the Kurdish region of Sulaimaniya - estimated the network would take six months to build, and could attract up to two million subscribers.

"Iraq has been without modern communications. It will be a huge market," said Mr Qader.

He added that GSM was the obvious network standard for Iraq.

"The land network was not up to scratch even in the best of days."

One company quick to register their interest was the Egyptian operator Orascom Telecom.

Chairman Naguib Sawiris said: "It is the biggest growth market in the region in the coming three or four years."

Military line

A US official said the Iraqi airwaves would be divided into 124 bands, leaving room for many companies to get involved.

The tender was for GSM , or the global system for mobile communications - the most widely used wireless standard in the world.

The US army already uses a GSM network built by MCI, formerly Worldcom, to communicate in Baghdad.

MCI won the contract to supply mobile phone services to about 10,000 military and aid workers last month.