(Adds cabinet approves resignation, populist cleric comment)
BAGHDAD, Nov 30 (Reuters) - Protesters burned tyres and surrounded a police station in the southern Iraqi city of Nassiriya on Saturday, a Reuters witness said, pressing their demands for sweeping reform despite the prime minister promising to quit.
Prime Minister Adel Abdul Mahdi announced his resignation on Friday after a call from Iraq's top Shi'ite Muslim cleric for the government to step down to end weeks of deadly unrest.
The unrest, which has killed more than 400 people, mostly demonstrators, amounts to the biggest crisis confronting Iraq since Islamic State insurgents seized vast swathes of Iraqi and Syrian territory in 2014.
It pits mostly young, disaffected Shi'ite protesters against a Shi'ite-dominated government backed by Iran and accused of squandering Iraq's oil wealth while infrastructure and living standards deteriorate.
Security forces have used live ammunition, tear gas and stun grenades against protesters for nearly two months. Scores of the more than 400 dead have been killed in recent days, particularly in the southern cities of Nassiriya and Najaf.
At a funeral procession for protesters killed this week in Najaf, a Shi'ite holy city, a mourner who declined to give his name said: "This man was protesting holding an Iraqi flag and a flower. He was shot dead. He's a sacrifice for the nation."
Iraq's cabinet approved Abdul Mahdi's resignation, a statement from his office said on Saturday, but parliament has yet to withdraw its support for the prime minister at a session on Sunday, making it official.
"The government has done all it can to respond to the demands of protesters and enact reforms ... and calls the parliament to find solutions (to unrest) in its coming session," the statement said.
Iraqi protesters have welcomed the resignation but say it is not enough. They demand the overhaul of a political system they say is corrupt and keeps them in poverty and without opportunity.
Populist cleric Moqtada al-Sadr, who has supported protests but not thrown his full weight behind them, said late on Friday that demonstrations should continue.
FAMILIES MOURN DEAD
"The next candidate for prime minister should be chosen by popular referendum and picked from among five proposed candidates," Sadr suggested in a statement on Twitter. He said protesters should meanwhile press their demands but reject violence.
The burning by demonstrators of the Iranian consulate in Najaf on Wednesday escalated unrest and led to Abdul Mahdi's resignation. In Nassiriya, deadly clashes erupted on Thursday hours after the torching of the Najaf consulate.
Nassiriya was the scene of the worst violence to hit war-weary Iraq since anti-government protests began in Baghdad on Oct. 1.
Many Iraqis fear violence will continue to escalate as angry families mourn dead relatives and the government moves slowly to enact only limited reform.
Weeks of political wrangling are expected before a successor to Abdul Mahdi is picked and a new government formed.
Iraq's semi-official Human Rights Commission said on Saturday those responsible for the killings of protesters must be brought to justice and that it would gather evidence for prosecution.
A statement issued by the commission did not acknowledge the prime minister's resignation.
The International Committee of the Red Cross urged a halt to rising casualties. "Firearms and live ammunition must only be used as a last resort," it said in a statement.
(Reporting by John Davison, Baghdad newsroom, Reuters TV; Editing by Toby Chopra)
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