A major report on US policy in Iraq has called for a new approach and urgent action to stop "a slide towards chaos".
US firepower has failed to end the insurgency in Iraq
The current US strategy of staying the course was no longer viable, Iraq Study Group leader James Baker said.
The report says US troops should be withdrawn from combat and instead used to train Iraqis.
It urges talks with Iran and Syria, a move which the US has so far rejected. President George W Bush said the report would be taken "very seriously".
The ISG report also advocates renewed US efforts to resolve the wider conflict in the Middle East.
The Iraqi government welcomed the review.
Deputy Prime Minister Barham Salih said the proposals were in line with the government's view that security must be transferred to Iraqis.
However, a spokesman for the main Sunni bloc in parliament said the report should have included a specific timetable for an American withdrawal.
UK Prime Minister Tony Blair, meanwhile, arrived in Washington on Wednesday for a visit which will include meetings with Mr Bush and congressional leaders - with Iraq expected to top the agenda.
The review came as the US military said 10 American soldiers had been killed in four incidents in Iraq.
Correspondents say the review offers no big surprises and no quick fixes.
The 142-page report includes 79 recommendations, of which three are key:
- A change in the primary mission of US forces in Iraq to enable it to begin to move combat forces out responsibly
- Prompt action by the Iraqi government to achieve reconciliation
- New and enhanced diplomatic efforts in the region
The report offers no hard timetable for a pullout of US forces, but says that combat troops could withdraw by early 2008.
However, the review recommended that the US "engage directly with Iran and Syria", and that Washington should "consider incentives and disincentives" for the two nations.
Speaking ahead of the report, Syria repeated its willingness to co-operate with the US, and said it was in Syria's interest to help Iraq.
But correspondents say the president appears unlikely to heed the call for more engagement with Syria and Iran, amid efforts by the administration to isolate both states.
The ISG report warns that if the situation worsens, there is a risk of a "slide toward chaos [that] could trigger the collapse of Iraq's government and a humanitarian catastrophe".
"Neighbouring countries could intervene... The global standing of the United States could be diminished. Americans could become more polarised," it warns.
Mr Baker said a new way forward should be implemented as quickly as possible.
"[Iraqis] have been liberated from the nightmare of tyrannical order only to face the nightmare of brutal violence.
"As a matter of humanitarian concern, as a matter of humanitarian interest and as a matter of practical necessity it is time to find a new approach."