The Australian government has been cleared of lying about the threat posed by Iraqi weapons of mass destruction.
Inspectors have yet to find any WMDs
A parliamentary inquiry said the government's presentation of the case for war was more moderate and measured than in Britain and the United States.
The committee recommended holding a second inquiry into the performance of Australia's intelligence agencies in the run-up to the war.
Prime Minister John Howard agreed to launch an independent investigation.
Although the bipartisan committee cleared the government of "sexing up" its estimation of the threat posed by Iraq, it did raise the possibility that "they overstated their case," said chairman David
Jull, a MP from Mr Howard's party.
Mr Howard has always denied that he misled parliament about the threat of weapons of mass destruction in Iraq.
In a televised address a year ago Mr Howard declared that Saddam Hussein had an arsenal capable of causing death and destruction on a mammoth scale.
When the inquiry opened, Mr Howard said intelligence information had not been distorted and he insisted his reasons for sending Australia to war were genuine.
The second inquiry will investigate the workings of the Australian spy agencies, after a number of errors of judgement were identified.
The committee wants the way intelligence is gathered and interpreted to be carefully examined. Australia relied on information from the United States and Britain before the invasion of Iraq.
Foreign Minister Alexander Downer said the committee's report
"vindicates the government's use of intelligence in stating the case for disarming Iraq".
About 2,000 Australian troops went to Iraq, with 850 still in the country.