US President George Bush says a long-standing rift with German Chancellor Gerhard Schroeder is "over" after the pair's first formal meeting in 16 months.
The leaders agreed to work together to stabilise Iraq
Both leaders said they had set aside past differences on Iraq and agreed to work together to stabilise the country.
"The first thing I told him, I said, 'Look, we had differences. And they're over.' We're going to work together," Mr Bush told reporters after the leaders spoke privately at the UN General Assembly.
Mr Schroeder says he believes agreement on a US resolution on Iraq can be struck "in the next few weeks".
But in his speech to the UN General Assembly there was an implicit criticism of the US's pre-emptive strike policy.
Mr Schroeder warned: "New threats, over which no state in the world can become master, require international co-operation more than ever".
But he said Germany was prepared to provide humanitarian, technical and economic aid in Iraq - and to train the Iraqi security forces.
In a defiant speech to the assembly on Tuesday, President Bush defended the war and urged all member states to help rebuild Iraq.
Russia, which sided with Germany and France in opposing the US-led action, has also signalled that agreement can be reached on a resolution.
The BBC's Rob Watson, in New York, says the moves all appear part of a wider effort on both sides of the Atlantic to mend relations.
The Russian, German and French leaders met on Wednesday to try to forge a common position.
Russian President Vladimir Putin's chief foreign policy advisor said the meeting was "on a wide range of international issues" and not directed against countries - like the US - not attending the meeting.
Mr Schroeder said he shared France's view that sovereignty should be transferred to Iraqis "as soon as possible".
But he said President Bush had spoken "very positively about the role of the United Nations" saying he was hopeful of a common resolution in the "next few weeks".
The US draft resolution calls for a multinational force for Iraq, but it does not cede any political or military control, which France and Germany are seeking.
Analysts say news of the US-German reconciliation represents a considerable step forward in relations.
Germany was not quite as outspoken as France against the Iraq war, but relations with the US had already been strained.
Mr Bush had been angered by the way in which Chancellor Schroeder criticised American foreign policy during his election campaign last year.
Their dispute had led Mr Bush to limit his interaction with Mr Schroeder.
But in June, the president telephoned Mr Schroeder to offer his condolences after German troops were killed in Afghanistan and the two exchanged a perfunctory handshake in Saint Petersburg in May.
Mr Schroeder said: "Differences have been left behind.. We both agree that we want to look into the future together."
But in his address to the General Assembly on Tuesday, French President Jacques Chirac openly criticised Washington's decision to attack Iraq without UN backing.
His views were echoed by UN Secretary General Kofi Annan, who said that "unilateralism" threatened to undermine the world body.
But, following a meeting with President Bush, Mr Chirac also sounded a conciliatory note over Iraq, saying France "very much [wanted] the Americans to succeed".
Mr Chirac has said that, despite misgivings, France will not veto the UN resolution on Iraq when it is put to a vote in the Security Council.
Meanwhile, an opinion poll in the US suggested more than half of Americans have growing doubts over Mr Bush's handling of Iraq in the aftermath of the war.