Rowsch Shaways, a Kurd, was named finance minister. No interior or defence minister was named but Abadi pledged to do so within a week, bringing the cabinet to 37 posts.
Abadi's deputy prime ministers are Hoshiyar Zebari, a Kurd and Iraq's only post-Saddam Hussein foreign minister, Saleh Mutlaq, a secular Sunni Muslim who served in the same position in the last government, and Baha Arraji, a Shi'ite Islamist and former lawmaker.
The parliament approved for the ceremonial posts of vice presidents the last prime minister Nuri al-Maliki, like Abadi from the Shi'ite Islamist Dawa party; former premier Iyad Allawi, a secular Shi'ite; and the last parliament speaker Usama al-Nujaifi. The three have been seen as political rivals.
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Abadi looked ahead to unifying the country and defeating Islamic State, whose offensive this summer across northern Iraq has threatened to tear his nation apart along sectarian lines.
Abadi vowed to "allow all people in Iraq to participate in liberating the cities and provinces which have been taken over by terrorist groups.. and to bring back security and stability."
The prime minister warned: "Any armed formation outside the authority of the state is banned."
However, Abadi was careful in referencing the sensibilities of his Shi'ite majority sect, which feels it is fighting for its life against Islamic State.
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Abadi saluted the network of Shi'ite militias and ordinary citizens, called volunteers, who mobilized this summer to stop Islamic State fighters from marching on Baghdad. The groups have become controversial, with Sunni political figures and tribal leaders accusing them of killing ordinary Sunni citizens.
Looking to the future, Abadi proposed that volunteers should be incorporated into "a national guard organization". He vowed to rebuild the Iraqi army, which nearly collapsed this summer in the face of Islamic State's march across northern Iraq. And he promised to work to improve Baghdad's thorny relationship with Iraqi Kurdistan. He also said he would push a programme of decentralization.
Until the last moment, it was not clear whether Iraq's Kurdish bloc would participate. Its senior leadership retreated to the Kurdish region for a final decision. The main sticking point was the Kurdistan Regional Government's (KRG) budget.
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This year, Baghdad stopped paying for the KRG's civil servants' salaries in protest against the Kurds exporting oil to Turkey independently. The Kurdish delegation arrived late to the parliament session on Monday but decided to give the new government three months to sort their disputes with Baghdad.