Nouri al-Maliki made the surprise call in his weekly televised address on Wednesday, urging militants to "return to their senses".
"We are not excluding anybody, even those who committed misdeeds, apart from those who killed or shed blood," he said.
It was not immediately clear how many people might be eligible, but the move appeared to be a bid to split the alliance of extremist militants, Baath party loyalists and anti-government tribes.
Maliki also gave warning on the threat posed by the so-called Islamic State (ISIL), saying that "no one in Iraq or any neighboring country will be safe from these plans".
He said the group's call for re-establishing a "caliphate" meant all the states in the region were a target and "inside the red circle".
Maliki's comments came a day after a chaotic opening to the new parliament, despite international leaders urging Iraq's fractious politicians to unite to help combat the terrorists.
Iraq's parliament reconvened on Tuesday before descending into chaos as politicians traded heckles and threats.
Sunni and Kurdish MPs stayed away from voting, meaning a speaker could not be elected as constitutionally required.
The so-called Islamic State of Iraq and the Levant claimed on Sunday they had unilaterally established a caliphate in the areas under their control in Iraq and Syria. The group declared Abu Bakr al-Baghdadi the new caliph and demanded that all Muslims pledge allegiance to him.
Since the announcement, Abu Muhammad al-Maqdisi, the Jordanian Salafist leader, and the Hizb ut-Tahrir have rejected the claim as "empty speech without substance".
Hizb ut-Tahrir dismissed the Islamic State's declaration of a caliphate straddling the border between Iraq and Syria, saying the group had no real "authority" in implementing Islamic rule.
NTJ/NJF