The Iraqi government has made little progress in meeting key political and military targets set by the US, a White House report says.
Iraq's security forces face an uphill struggle
The report says that Iraq has performed satisfactorily on nine out of 18 benchmarks - one more than in July.
Among the failures, it cites militia control over security forces and not enacting laws on sharing oil resources.
The report comes a day after President George W Bush announced a troop withdrawal from Iraq.
He said he had accepted the advice of the US commander in Iraq, Gen David Petraeus, who gave his own progress report to Congress earlier this week and said the recent military "surge" in Iraq was working.
Mr Bush's plan would take troop numbers back to about 130,000 by July 2008 - the level before the build-up began in February.
Speaking after President Bush's announcement, the Iraqi foreign minister, Hoshyar Zebari, said his government had to move more rapidly towards national reconciliation and political progress.
Mr Zebari said Iraq faced many challenges, from terrorism, from regional intervention and from conflicting interests.
Meanwhile another US government report says that religious freedom in Iraq has sharply deteriorated over the past year.
The annual State Department report on religious freedom said people of all religions and sects in Iraq were subject to harassment, intimidation, kidnapping, and killing.
It blamed the situation on the insurgency.
The White House report on benchmarks, delivered to Congress, is the Bush administration's own assessment of the situation in Iraq. It is one of several recent US reports on Iraq's progress.
Based on data available as of 1 September 2007, it says "the Iraqis have made satisfactory progress since January 2007 on nine benchmarks".
It mentions improvement in only one area compared with the initial assessment by the White House in July - reconciling former members of Saddam Hussein's Baath Party.
The report says more than 45,000 former army personnel have already been granted pensions or reinstated to active duty.
Among the targets where the Iraqi government had made satisfactory progress were:
- forming a constitutional review committee and completing the review
- enacting and implementing legislation on de-Baathification
- legislation in semi-autonomous regions
But failure was registered in meeting seven benchmarks, including:
- the equitable distribution of hydrocarbon resources
- increasing the number of Iraqi security forces able to operate independently
- ensuring that Iraq's political authorities are not undermining or making false accusations against foreign forces
The report also said it was too early to assess two benchmarks - amnesty legislation and a militia disarmament programme.
Overall, the White House paints a mixed picture but admits that progress by the national government has been disappointing, the BBC's Jane O'Brien in Washington says.
The report does, however, offers justification for an enduring relationship with the Iraqi government, our correspondent says.
In August, the Government Accountability Office (GAO) - a Congressional watchdog - said Iraq had met only three out of the 18 benchmarks.
Pressure is growing on Mr Bush to reduce the US presence in Iraq
The Bush administration later challenged the report, saying the GAO portrayed the situation only in "blacks and whites" and ignored "grey" areas of progress.
After the release of the latest report, the White House said that even though Iraqis had failed to pass key national legislation, "the objectives of such laws are in some ways already being achieved" in practice.
Oil revenues, for instance, were being shared equally, it said, "even if the formal benchmarks themselves have not been met".
And it said that US efforts in Iraq extended far beyond the 18 benchmarks.
"We continue to work with the Iraqis to establish the strategic environment in which security and meaningful reconciliation can develop and take root - in ways not easily measured by these benchmarks," the statement said.