Iran appears "less determined" to develop nuclear weapons than previously thought, US intelligence officials say.
The report says Iran is several years away from building a bomb
Tehran halted its nuclear weapons program in 2003 but is continuing to enrich uranium, a National Intelligence Estimate assessment has concluded.
Enriched uranium is used in nuclear bombs but Tehran says the aims of its nuclear activities are peaceful.
A senior advisor to President Bush said the report was "positive" but the risk of a nuclear Iran remained "serious".
Iran is currently under sanctions from both the UN Security Council, which is demanding the end of uranium enrichment, and unilateral US sanctions.
The declassified summary of the report, which draws together information from the US's 16 intelligence agencies, says with "high confidence" that Iran stopped its nuclear weapons programme in 2003 "in response to international pressure".
The assessment says with "moderate confidence" that the programme has not restarted.
This is a turnaround from previous assessments, when US intelligence agencies believed Iran was trying to develop a nuclear weapon.
Iran made "significant progress" in 2007 installing gas centrifuges used to enrich uranium - a process necessary for producing the fissile nuclear material needed to build a nuclear bomb, the report says.
But the report's authors judge with "moderate confidence" that Iran "still faces significant technical problems" operating the new equipment.
And they conclude that the country is not likely to have enough highly enriched uranium to build a bomb until 2010-2015.
US National Security Advisor Stephen Hadley said the report's findings confirmed the US was "right to be worried" about Iran's nuclear ambitions and that President George W Bush had "the right strategy".
The international community should "turn up the pressure on Iran" using diplomatic isolation, UN sanctions and other financial leverage, he said.
The BBC News website's world affairs correspondent, Paul Reynolds, says the report is cautious in its assessment of Iran's nuclear activities and provides little evidence for those who would like an early military attack.
He says it will strengthen the hand of those who want further sanctions since it states that past pressure has worked.
BBC security correspondent Gordon Corera says the estimate is in stark contrast to the alarmist and hawkish language coming from some parts of the administration.
Last month Mr Bush warned that stopping Iran developing nuclear technology was vital to prevent World War III.