NAIROBI (Reuters) - Kenya's feuding political parties have agreed to set up an independent review of the disputed Dec. 27 presidential election, mediator Kofi Annan said on Friday.

Annan, reporting on progress at this week's talks, also said it was essential for the parties to form a "broad coalition" to agree on constitutional and electoral reforms going forward.

Talks will resume on Tuesday, he said, in search of a political pact most expect to be power-sharing between President Mwai Kibaki's party and opposition leader Raila Odinga's Orange Democratic Movement.

Their dispute over who won the election triggered violence that has killed 1,000 people and displaced more than 300,000 others, tarnishing Kenya's reputation as a stable democracy, promising economy, and regional hub for trade and tourism.

Annan said "considerable" progress was being made even though his goal of reaching a political accord this week had passed. "The momentum is with us," he told reporters.

"I will stay as long as it takes to get the process to an irreversible point."