More than 50% of Iraqis think their lives are good, more than at any time in the last three years, a survey says.
A majority of Iraqis expressed confidence in the police
The poll for the BBC, ABC, ARD and NHK of more than 2,000 people also suggests that a majority believe that security in their area has improved since 2007.
And while most Iraqis still believe US troops are making things worse, the number who want the Americans to pull out immediately has fallen.
But the poll also shows Iraq's main ethnic groups are deeply divided.
BBC World Affairs editor John Simpson says the continuing divisions make it "pretty meaningless to talk about 'Iraqi' opinion."
"What counts is how the individual groupings, Sunni, Shia and Kurdish, feel - and especially the Sunnis, since much of the violence is from that quarter," he says.
While 55% of all Iraqis believe that their lives are good, only 33% of Sunnis are happy with their lives, compared with 62% of Shias and 73% of Kurds.
"In spite of all the improvements, the Sunni population of Iraq clearly remains deeply alienated, and deeply hostile," our correspondent says.
Some 62% of those polled say security in their own area is good - up from 43% last year - but exactly half of all Iraqis still rate security as the biggest problem for the country overall.
And Iraqis are still reporting problems with the provision of basic services.
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Large majorities of Iraqis - 88%, 81% and 61% respectively - say that the availability of water, fuel and electricity is "very bad" or "quite bad".
These results echo the findings of a Red Cross report on the humanitarian situation in Iraq.
The Red Cross found that millions of Iraqis have little or no access to clean water, sanitation and healthcare, with some families spending a third of their average monthly wage of $150 (£75) just buying clean water.
And Iraqi public hospitals provide only 30,000 beds, less than half of the 80,000 needed, the report says.
Next month, the top US commander in Iraq, Gen David Petraeus, will testify before the US Congress about progress in Iraq since the beginning of the "surge", when 30,000 extra troops were sent to the country.
One of the stated aims of the surge was to provide enough security to allow Iraqi politicians to hammer out a lasting political settlement.
More Iraqis now feel confident about the government
The poll suggests that Iraqis are sceptical about political progress.
Only 21% believe that the increase in US forces has made conditions for political dialogue in Iraq better, while 43% think the surge has made conditions worse.
And 38% want American forces to leave immediately, compared with 35% who want the troops to remain until security has been restored.
The survey suggests that support for the Iraqi government is returning, after a drop-off in recent years.
Just under 50% of Iraqis now have confidence in the government, up from 39% in March 2007.
"Iraq seems to be holding together as a country. Overwhelming numbers of both Sunnis and the Shia still want it to remain a unified nation," says John Simpson.
"By comparison the Kurds are the splitters. Only 10% of them want to keep the country together."
Support for Iraqi security forces remains high, with 67% expressing confidence in the police and 65% in the army.
In contrast, public confidence in local militias has fallen since last year.
In March 2007 it stood at 36%, by August it was down to 24%, and it has fallen another 2% since then, to 22%.
Within that, Shia feelings about local militias has fallen the most steeply.
In March 2007, 51% of Shias had confidence in militias - now that figure has declined to 28%, the survey suggests.
The poll is the fifth such survey to be conducted since the beginning of the US-led invasion in 2003.
The survey was conducted by D3 Systems and KA Research Ltd for the BBC, ABC News, NHK of Japan and ARD of Germany.
More than 2000 Iraqis were questioned across all the provinces of Iraq between February 12 and 20, 2008. The margin of error is +/- 2.5%.