President Bush has said the US remains committed to defeating its enemies and creating a democratic Iraq.
Bush was trying to win over an increasingly disillusioned public
In a keynote speech aimed at reassuring the US public, he said he was taking five "specific steps" to help Iraq achieve democracy and freedom.
Mr Bush also said the US would demolish Abu Ghraib prison after the handover of power, if Iraq's new government agreed.
The speech came after the US and UK tabled a draft resolution at the UN on plans for the handover on 30 June.
The president stressed that the United Nations would have an important role to play in the process of making Iraq a democracy.
The BBC's Rob Watson, in Washington, says Mr Bush spoke with rare passion in an attempt to seize back the initiative on Iraq - a massive challenge.
The latest US opinion poll meanwhile suggests Mr Bush is now more unpopular than he has been at any time during his period in office.
A CBS poll suggested that 61% of Americans disapprove of the way he is handling the situation in Iraq.
Speaking at an army college in Pennsylvania, Mr Bush said Iraq was now the "central front in the war on terror".
HANDOVER: KEY DATES
24 May: US and UK table draft resolution
End of May: UN envoy Lakhdar Brahimi to name Iraqi interim government
Early June: Detailed agreement on control of foreign troops in Iraq
Early June: US, UK hope UN resolution can be adopted - maybe by D-Day celebrations on 6 June, or by the G8 Summit on 8 June
30 June: Handover from Coalition Provisional Authority to interim government
"There are difficult days ahead and the way forward may sometimes appear chaotic," he said.
"Yet our coalition is strong. Our efforts are focused and unrelenting, and no power of the enemy will stop Iraq's progress."
The president also gave details of the interim Iraqi government, which will consist of a president, two vice-presidents, a prime minister and 26 ministers.
However, Mr Bush said the United States would keep its troops in Iraq at the current level as long as necessary, because of the continuing unrest.
In a clear attempt to win hearts and minds of Iraqis, our correspondent says, Mr Bush said he had sent American troops to liberate Iraq, not to make them Americans.
Mr Bush, who is seeking re-election in November, has been damaged by the scandal over US abuses at Abu Ghraib, and ongoing violence in Iraq.
The prison had become "a symbol of disgraceful conduct by a few American troops who dishonoured our country and disregarded our values," he said.
The president announced five steps in his plan to achieve freedom and democracy in Iraq:
Hand over authority to a sovereign Iraqi government;
- Help establish the stability and security in Iraq that democracy requires;
- Continue rebuilding Iraq's infrastructure;
- Encourage more international support;
- Move toward free, national elections that will bring forward new leaders empowered by the Iraqi people.
Many of the details in Mr Bush's plan for Iraq were earlier presented to the United Nations Security Council in the form of a new draft resolution on the country's future.
American and British officials are hoping the resolution will be passed in early June, but correspondents say the first discussions on Monday already brought up possible sticking points.
Several ambassadors are said to have wanted a better definition of the sovereignty that's being handed over to the Iraqis, as the draft is not clear on whether the interim government will have any control over security.
Correspondents say another issue that may prove problematic is the lack of a deadline for the US-led forces to leave the country.
Talks on the draft are due to resume on Wednesday.