BAGHDAD, Dec 2 (Reuters) - It is impossible to hold a poll to decide the status of the key Iraqi city of Kirkuk this year and work on it will have to begin in 2008, U.S. Deputy Secretary of State John Negroponte said on Sunday.

Iraq's constitution provides for a referendum for the ancient city to be held by the end of this year but it has long been accepted that it cannot meet that schedule, as a census of eligible voters has not even started.

Kirkuk, a mixed city of Kurds, Arabs and Turkmen 250 km (155 miles) north of Baghdad, is seen as the next potential powderkeg in Iraq, with Kurdish nationalists demanding the city be included in their largely autonomous region.

"Clearly it's not going to be possible between now and the end of this year to mount a referendum," Negroponte told a news conference in Baghdad after talks with Iraqi leaders.

Arabs and Turkmen fear they will be pushed out of Kirkuk if the referendum goes ahead and want it either stalled or put off for good. Analysts fear a bloodbath if the vote goes ahead against the wishes of other sects.

Before the referendum can proceed, a census must be completed and a "normalisation" process mandated under Article 140 of Iraq's 2005 constitution must also be dealt with.

"Normalisation" involves paying compensation to Arab settlers to reverse Saddam Hussein's Arabisation policy of the 1970s and 1980s, when thousands of Kurds and Turkmen were expelled from Kirkuk to be replaced by Arabs.

"I would expect ... that efforts will be made in the new year to get a process going forward that deals with Article 140 of the constitution and of course the issue of Kirkuk," Negroponte said.

Sunni Arabs fear that the normalisation process, under which Arab families have been offered $15,000 and land to return to their original home towns, is an attempt to influence the outcome of the vote by changing Kirkuk's demographics.

Others believe it is an unsubtle attempt by Kurds to deny others a share of the area's oil wealth.

Iraq's Independent Electoral Commission has said it would need at least seven months to get ready for the plebiscite.

Neighbouring Turkey, already angry about raids by Kurdish rebels seeking a separate homeland, fears Iraqi Kurds will take control of Kirkuk and turn it into a new state, possibly reigniting separatism among its own Kurdish population. (Reporting by Paul Tait, editing by Tim Pearce)

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