The United Nations Secretary General Kofi Annan is set to call for a swift handover of sovereignty to the Iraqi people, the BBC has learned.
US forces have blown up a statue of Saddam Hussein on horseback
The recommendations are contained in a report due to be presented to the UN Security Council next week, a copy of which has been obtained by the BBC.
The report says there is a pressing need for the Iraqi people to be given a clear and specific sequence of events leading to the end of the military occupation.
Top Pentagon advisers have warned that time is running out for the United States to establish law and order in Iraq, where another two US soldiers were killed on Friday.
One soldier died when his vehicle hit a roadside bomb near the flashpoint town of Falluja, 50 kilometres (32 miles) west of Baghdad.
The US military says another of its soldiers - from the First Armoured Division - was killed by hostile fire while patrolling Baghdad.
Their deaths bring to 35 the number of US soldiers killed by hostile fire since hostilities were officially declared over on 1 May. The overall US death toll is 149 - higher than the total US fatalities in the 1991 Gulf War.
The latest attacks came as intelligence officials in the United States said a taped message broadcast on Arabic television on Thursday was probably the voice of Saddam Hussein.
CIA officials in Washington said the poor quality of the recording prevented technical analysts from being absolutely certain of its authenticity, but references to recent events suggested it was a recent recording.
In Mr Annan's report, carried out in close consultation with his special representative in Iraq, Sergio Vieira de Mello, he says democracy should not be imposed on Iraq from the outside - it has to come from within.
The BBC's UN correspondent, Greg Barrow, says the report paints a picture of a country in which the lack of security remains the primary concern for most Iraqis and where the people remain anxious about what role they will play in determining their political future.
In further signs of discontent, hundreds of Iraqis have joined demonstrations against the country's new governing council, which met for the first time this week.
The protests came after Friday sermons in which both Sunni and Shia clerics strongly criticised the American-appointed council, saying it did not represent the Iraqi people.
The Pentagon report - assessing post-war reconstruction efforts in Iraq - coincided with the start of a five-day tour of Iraq by US Deputy Secretary of Defence Paul Wolfowitz.
Mr Wolfowitz said his purpose was to thank US troops and to see for himself what it was, in his words, "for the Iraqi people to be liberated".
The Pentagon team has urged the Bush administration to immediately "turbo-charge" reconstruction efforts, by swiftly injecting funding and personnel and securing the involvement of other countries and the United Nations.
"The next three months are crucial to turning around the security situation, which is volatile in key parts of the country," the report says, adding that the US must also be ready "to stay the course in Iraq for several years".
The US military said on Friday it had detained 62 former "regime leaders" in its latest operation aimed at eliminating armed Iraqi resistance.
Operation Soda Mountain, the fourth of its type, resulted in the seizure of 4,297 mortar rounds, 1,346 rocket-propelled grenades and 635 other weapons, it said.
Most of the attacks against US troops have taken place in a area north and west of Baghdad, seen as a Sunni Muslim stronghold where supporters of ousted President Saddam Hussein are still active.