By Khaled Yacoub Oweis

BAGHDAD, Aug 27 (Reuters) - Acclaimed as the saviour who ended bloodshed in the epicentre of Shi'ism, Ayatollah Ali al-Sistani is now looked to by many Iraqis to help the country shed decades of violence and become the first Arab democracy.

The Iranian-born ayatollah may, on past record, be reluctant to play a more prominent public, political role in Iraq.

But he could be be the only figure involved in the Najaf crisis to have emerged with an enhanced reputation after the American-backed government and anti-U.S. cleric Moqtada al-Sadr refused to back down until he intervened.

The truce forged by Sistani committed Sadr, whose "no democracy under occupation" motto appeals to nationalist clerics and a generation of poor Shi'ites marginalised under Saddam Hussein, not to hinder elections due in January.

The truce also pushes U.S. forces out of Najaf. The sight of U.S. tanks in front of the walls of the Imam Ali shrine, which houses the grave of the second most central figure in Shi'ism after the Prophet, sent shudders across the Muslim world.

Sadr, whose three-week uprising further hurt the economy and helped disrupt oil exports, took refuge in the shrine after U.S. forces closed in on him.

Only the surprise return of Sistani from medical treatment in London on Wednesday and his call for Iraqis to march on Najaf ended what looked like imminent storming of the shrine.

The move drew admiration even from those from a different school than Sistani's largely apolitical ideology.

"Sistani's brave return to Najaf which ended the crisis is similar to our leader's return to Iran which ended the Shah's rule," said former Iranian President Akbar Hashemi Rafsanjani.

He was referring to the 1979 home-coming of Ayatollah Ruhollah Khomeini which swept aside Iran's U.S.-backed ruler.

Sistani, however, opposes Khomeini's doctrine of the dominance of clergy in government. His subtle approach to politics helped to keep Iraq united after the U.S. invasion and to commit the interim government to prompt elections.

Sistani's quiet interventions during the U.S.-led occupation forced Washington to speed up the timetable for polls.

"A GIFT FROM HEAVEN"

The Najaf crisis uncomfortably thrust the cleric into the centre of politics.

Chibli Mallat, a Lebanese lawyer who worked with the former Iraqi opposition for years, said a more politically active Sistani could be what Iraq needs.

"It has became clear that the political process would go nowhere without Sistani and that elections could not be delayed. His success in Najaf will help undermine the increasing callousness of the government and contain Sadr," Mallat said.

"Sistani's arrival to Najaf was a gift from heaven to everyone. The Americans realised they would not have achieved anything if they remained in the city. A military victory for them would have been actually a defeat," said Mallat, author of works on Shi'ite political thought.

The U.S. use of force to kill hundreds in Najaf created dissent within the government and was widely criticised, by political foes of Sadr as well as his backers.

"We reject this ruthlessness. These forces do not use such methods to quell their own internal problems. The more we invite them (the Sadr movement) into the political system the more we can solve the problem," Amar al-Hakim, a senior official in the Supreme Council for the Islamic Revolution of Iraq, told al-Hayat newspaper.

It remains to be seen whether Sadr will take part in elections, or whether polls can be held in a country awash with weapons, militias and old rivalries that came to the surface after the fall of Saddam.

But many Iraqis feel Sistani has boosted the hopes of democracy.

"Sistani saved the day," said political commentator Ahmad al-Rikaby, who runs the independent Radio Dijla.

"Whether he likes it or not, Sistani has become a political as well a religious reference," he said. "The government also has no choice. It will seek his opinion every step of the way."