Italian Prime Minister Silvio Berlusconi has said the US bears some blame for the killing of an Italian agent, but it will not hurt relations.
Silvio Berlusconi has to balance foreign and domestic pressures
He told parliament that the US had implicitly acknowledged some problems at the checkpoint where US forces shot dead Nicola Calipari in March.
US and Italian reports differed sharply on the events leading up to the killing, which caused outrage in Italy.
But Mr Berlusconi said Italy remained Washington's close friend and ally.
"Our friendship with the US has overcome more difficult tests than this one," he said, addressing both houses of parliament.
He said Italy had no intention of rushing troops out of Iraq before their job was done.
Mr Calipari was killed when his car came under fire by US troops on 4 March as he escorted a newly freed Italian hostage, journalist Giuliana Sgrena, to Baghdad airport.
After a proposed joint US-Italian report on the shooting collapsed, both countries published their own, very different, versions of events.
In its report, the US insisted that its soldiers were not at fault, followed their rules of engagement and should not be punished.
But Mr Berlusconi cited a string of mistakes made by US soldiers at a checkpoint which he painted as an accident waiting to happen.
US military: Car approaches checkpoint at high speed
Troops attempt to tell driver to stop with arm signals, lights and warning shots
Soldiers shoot into engine
Italian government: No warning signs to motorists about impending checkpoint
Car not speeding and did not accelerate after warning shots
Proper inquiry impossible because vehicles removed and army logs destroyed just after shooting
Mr Berlusconi said the absence of intent on the part of the soldiers did not mean that there was no-one to blame for the fatal shooting, adding that US forces had changed procedures at checkpoints since the killing.
"If you change the rules then, implicitly, you admit that the previous rules were not working," he said.
Many "dark areas" in the sequence of events remained, he said, pledging full government co-operation with Italy's own ongoing criminal investigation.
His comments, seeking to ease domestic tension over Iraq while reassuring a strong ally, came a day after US President George W Bush called him to repeat his regrets over what had happened.
Observers have said that the failure to agree on the sequence of events has tarnished the close relationship between the two countries, a claim dismissed by Mr Berlusconi.
"The friendship and loyalty of the Italian government towards the US - based on the immutable foundations of democracy and freedom - is beyond discussion," he said.
Despite increasing opposition to Italian involvement in Iraq and calls to withdraw the country's 3,000 troops, Mr Berlusconi said that pulling troops out was not an option.
"There is no reason to say 'Let's all go home' - it would be incomprehensible."
Opposition leader Piero Fassino said that the US should now formally apologise.
"Words of friendship have come from the US government," he said, "but not an apology for a tragic accident."