The United States House of Representatives has voted in favour of pulling most combat troops out of Iraq by April next year.
Some Republicans have broken ranks with the President on Iraq
The new legislation calls for the Pentagon to begin withdrawing combat troops within four months.
The vote comes despite President George W Bush's threat to veto any timetable.
Both the House and the Senate must pass separate legislation and then reconcile their two versions for a measure to be passed to the president.
Correspondents say the House of Representatives, controlled by the Democrats, is hoping to pressure the Senate to approve a similar timeline.
It is the third time this year the House has voted in favour of legislation to end US military involvement in Iraq.
One previous legislative push was vetoed by Mr Bush, while a second failed when the Senate voted twice against imposing a withdrawal timetable.
The latest attempt would allow some US forces to stay in Iraq to train the Iraqi army and carry out counter-terrorism operations.
"It is time for the president to listen to the American people and do what is necessary to protect this nation," said Senate Majority Leader Harry Reid, a Democrat.
"That means admitting his Iraq policy has failed, working with the Democrats and Republicans in Congress on crafting a new way forward in Iraq and refocusing our collective efforts on defeating al-Qaeda."
Earlier, President Bush presented an interim report on Iraq which said there had been only limited military and political progress following his decision to send troop reinforcements earlier this year.
The security situation remains "complex and extremely challenging", the report said.
It added that the economic picture was "uneven" and political reconciliation lagging.
The report said the Iraqi parliament had failed to debate crucial legislation for the country's oil industry.
It also warned of "tough fighting" during the summer, saying al-Qaeda was likely to "increase its tempo of attacks".
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"The report makes clear that not even the White House can conclude there has been significant progress," said House Speaker Nancy Pelosi, a Democrat. "We have already waited too long."
But Mr Bush rejected calls for a withdrawal of US forces, saying it would be disastrous.
He said troops would only be withdrawn when conditions were right, "not because pollsters say it'll be good politics".
The Iraqi ambassador to Washington, Samir Sumaidaie, told the BBC that the US had set an unrealistic timescale to solve Iraq's problems.
"The Iraqi government is working under extremely difficult conditions, not all of which were created by them. To say that we have failed and we are doomed to fail is defeatist," he said.
The BBC's James Coomarasamy in Washington says the most eagerly awaited reaction is yet to come - that of wavering Republicans who could determine whether or not Congress will try to force the president's hand.
Three Republicans in the Senate have broken ranks with the president and called for a phased troop withdrawal.
Several others have signed on as supporters of a bipartisan bill to implement a series of changes recommended last December by the Iraqi Study Group.
The Democrats will need support from the Republicans if they are to push the legislation through in a final Senate vote expected next week.