The session opened with recitations from the Koran, three months after 275 members were elected in landmark elections on December 15.
Vehicles in Baghdad have been barred from the streets in a bid to keep car bombers at bay, and additional checkpoints have sprung up across the city.
The government told civil servants to take a holiday and many other residents bunkered down at home, fearing attacks by insurgents bent on proving the caretaker government cannot guarantee security. Most shops remained closed.
Troops are guarding the perimeter of the area which is home to the government, the court trying deposed dictator Saddam Hussein and the US and British embassies.
The new parliament -- the first elected to a full four-year term since the ouster of Saddam in 2003 -- will again be dominated by the Shiite United Iraqi Alliance, which can count on the support of 130 MPs.
The Kurdish coalition has 53 seats, while various Sunni parties control at least 55 seats. Secular-based and minority parties hold the remaining seats.
All factions have called for setting up a government of national unity, but have so far failed to agree on who should lead the next cabinet.
President Jalal Talabani suggested on Wednesday that the long awaited cabinet should be ready by the end of March, a conclusion deemed overly optimistic by rival politicians.
Outgoing Prime Minister Ibrahim Jaafari estimated that forming the cabinet would take a little longer.
"I think a month is enough to form a government, if we keep to the constitution," he told state television.
Disagreements
Of particular disagreement is the Shias' nominee for the key job of prime minister, currently held by Ibrahim Jaafari.
"I don't expect to see a new government before May," said one participant in the leaders' conference, Hassan Shumari, from the dominant Shiite United Iraqi Alliance.
"We're still a long way from agreeing on a government," echoed Mahmud Othman, a Kurdish representative.
The deadlock comes at a time when a surge in communal violence has left hundreds dead since a Shiite shrine was blown up on February 22.