Iraq's top two parliament groups demand PM's 'immediate' resignation

"We demand the government apologise to the people and resign immediately," said Hassan al-Aqouli, spokesman for the list of populist Shia cleric Moqtada al-Sadr that won the most seats in a May election.

The announcement dealt a severe blow to Abadi's hopes of holding onto his post through a parliamentary bloc unveiled just days earlier with Sadr, a former militia chief.

Ahmed al-Assadi, spokesman for the second-largest list, the Conquest Alliance, condemned "the government's failure to resolve the crisis in Basra", a southern city where 12 protesters were killed this week by security forces.

The Conquest Alliance was "on the same wavelength" as Sadr's Marching Towards Reform list and they would work together to form a new government, Assadi said.

Abadi defended his record in parliament, describing the unrest as "political sabotage" and saying the crisis over public services was being exploited for political ends.

Anger in Basra flared after the hospitalisation of 30,000 people who had drunk polluted water, in an oil-rich region where residents have for weeks complained of water and electricity shortages, corruption among officials and soaring unemployment.

Demonstrators have set fire to government buildings, the Iranian consulate and the offices of pro-Tehran militias and political parties.

Abadi has scrambled to defuse the anger and authorities have pledged a multi-billion dollar emergency plan to revive infrastructure and services in southern Iraq.  

Agencies contributed to this report. 

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