By Shamal Aqrawi

ARBIL, Iraq, Dec 26 (Reuters) - Lawmakers in Iraq's largely autonomous Kurdish region approved on Wednesday a six-month delay to a referendum to decide the fate of the oil-rich city of Kirkuk, which is claimed by Kurds and Arabs.

The vote defuses for now a potentially explosive issue that analysts have warned could trigger a fresh wave of bloodletting in Iraq and draw in neighbouring Turkey.

The speaker of Kurdistan's parliament, Adnan al-Mufti, said the proposal, made by new United Nations special representative to Iraq Steffan de Mistura, had been overwhelmingly endorsed.

Parliament's agreement to delay the referendum, due to take place by Dec. 31 under Article 140 of the constitution, is important as it has been a largely Kurdish-driven process.

The Shi'ite-led government in Baghdad has made no preparations, including a census, to hold it, and Washington, more concerned about easing sectarian violence elsewhere in the country, has largely adopted a hands-off approach.

Iraq's minority Kurds, who control the Kurdistan region, see Kirkuk, which sits on one of the world's largest oil fields, as their historical capital. Arabs encouraged to move there under Saddam Hussein, however, want it to remain under Baghdad.

"I believe that Article 140 is dead and today we have sent it to the morgue," said Mohammed Haji Mahmoud, one of 17 MPs who rejected the extension.

Many lawmakers said they were concerned Article 140 would not be implemented in the next six months. Some cast doubts on the ability of the United Nations to make any progress.

U.S. Secretary of State Condoleezza Rice visited Kirkuk last week and praised De Mistura's initiative to give the U.N. an expanded role in moving the referendum process forward.

At a news conference later with Rice in Baghdad, De Mistura said the United Nations mission in Iraq planned to work with the different players to reconcile their differences and "show that dialogue can produce much better results than violence".

Turkey, which has a large Kurdish population, is watching closely to see what happens. Ankara fears Kirkuk's inclusion into Kurdistan would give Kurds access to oil revenues that could encourage Kurdish dreams of an independent state and stir unrest among Turkish Kurds. (Writing by Ross Colvin; Editing by Ibon Villelabeitia)

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