The protesters have been demanding an overhaul of the ruling elite and have rejected Allawi as a product of the political class they have been protesting against for months.
When he announced his designation on February 1, Allawi extended a hand to the protesters and urged them to keep up their demonstrations.
"Since the beginning of the week, Mohammad Allawi has held a string of meetings with several dozen representatives of protesters from the eight provinces taking part in the uprising," said Hisham al-Hashemi, an Iraqi security expert present at the meetings.
According to Hashemi, Allawi pledged to release Iraqis detained for demonstrating, compensate the families of those killed in protest-related violence and work with the United Nations to implement the demonstrators' demands.
Allawi, 65, served as communications minister twice since the US-led invasion of 2003 but stepped down both times, citing corruption in the government.
Rooting out graft in Iraq -- the 16th most corrupt country in the world according to Transparency International -- has been a key demand of protesters.
Hashemi said Allawi promised the demonstrator delegations that he would take on embezzlement and the bloated public sector by changing up to 170 "acting" government officials and 450 directors-general in the ministries.
The PM-designate also said up to two ministers in his cabinet, which he has until March 2 to form, would be activists themselves and that demonstrators could have a say in up to five ministerial nominations.
It will be subject to a vote of confidence by parliament and if it passes, Allawi will formally take up his role as prime minister.
Until then, he is not able to implement executive decisions, including many of the reforms he is pledging.
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