UPDATE 2-U.S. cautiously welcomes Lebanon deal

(Adds details, analyst comments)

By Sue Pleming

WASHINGTON, May 21 (Reuters) - The United States on Wednesday put the best face on a deal between Lebanese factions, praising it despite concessions won by Hezbollah but cautioning that the political crisis was not yet over.

U.S. Secretary of State Condoleezza Rice said it was a move toward resolving the latest crisis in Lebanon, which threatened to become all-out civil war following a military campaign by Iranian and Syrian-backed Hezbollah this month.

"We view this agreement as a positive step towards resolving the current crisis by electing a president, forming a new government and addressing Lebanon's electoral law," Rice said in a statement.

The Arab League mediated a deal between the U.S.-backed ruling coalition of Prime Minister Fouad Siniora and the Hezbollah-led opposition, resolving a dispute over a law for holding 2009 parliamentary elections and meeting the opposition's long-standing demand for veto power in Cabinet.

Analysts said the agreement was a clear defeat for Siniora's government and demonstrated Hezbollah strength on the ground, a view dismissed by senior U.S. officials who argued that Hezbollah's image was damaged by the latest fighting.

Senior State Department official David Welch welcomed the accord negotiated in Doha, Qatar, but said there was still a long way to go and the pact must be fully implemented.

"This is not the end of this crisis. Lebanon still has to go through implementing this agreement. These are very delicate political subjects for Lebanon," Welch told reporters.