US Secretary of State Colin Powell has admitted that the US did not expect that American forces would face such intense and sustained attacks in Iraq.
Up to eight rockets were fired at the Hotel Rashid
Mr Powell was speaking after rockets hit the Rashid hotel, used by US officials and one of the most heavily guarded sites in Iraq's capital.
US officials say they are facing increasingly sophisticated attacks.
Late on Sunday, just hours after Mr Powell's comments, two blasts detonated near the US-led coalition's HQ.
A military spokesman said the explosions had gone off in the
capital's Green Zone, which also includes the Rashid hotel.
Early on Sunday morning, several rockets had slammed into the hotel, killing a US soldier and wounding 17 other people. These included 11 Americans and nationals from the Czech Republic, Italy, Britain, Nepal and India, coalition officials said.
US Deputy Defence Secretary Paul Wolfowitz, who was staying there, escaped unhurt.
Mr Wolfowitz vowed that the US would not be cowed into abandoning Iraq.
The attack was likely to have been planned well in advance and not targeted at Mr Wolfowitz, according to the US general in charge of security in Baghdad, Brigadier General Martin Dempsey.
"There is no question that it required some degree of preparations, probably lasting over a couple of months," General Dempsey told a news conference.
MAJOR BOMB ATTACKS
12 October: Suicide car bomb outside Baghdad Hotel - six killed
9 October: Suicide car bomb hits police station in the northeast Shia district Sadr City - at least 10 killed
29 August: Car bomb at mosque near Najaf - 125 killed including Shia Islam top cleric
19 August: UN headquarters, Baghdad - 23 killed, including Sergio Vieira de Mello, veteran official
7 August: Jordanian Embassy - at least 14 killed
The attackers appear to have driven a van into a nearby park where they dropped off a trailer containing a rocket launcher, disguised as a generator, about 400 metres (1,312 feet) from the hotel.
They then set off a timing device and fled, leaving the rockets to launch at the hotel a few minutes later.
General Dempsey accused the attackers of trying to "discredit" recent moves by the US-led coalition to improve security, including the opening of a key bridge and the lifting of a night-time curfew for the start of Ramadan.
He insisted he "absolutely" stood by comments that security had improved.
Nevertheless, the attack has brought what the BBC's Jon Leyne describes as remarkably frank comments from members of the Bush administration about the challenge they face in Iraq.
"We did not expect it would be quite this intense this long," Mr Powell told NBC television.
"We are still in a conflict and I don't think the president ever sought to minimise that," he said.
"So we have much work ahead of us and we will not shrink from this work," Mr Powell said, insisting that the security situation would be brought under control.
The US administrator in Iraq, Paul Bremer, said there was evidence that what he described as terrorist groups were getting better organised and using more sophisticated approaches.
Mr Bremer, who is in Washington for consultations, said he had ordered a full investigation into the attack.
Both he and Mr Powell made a point of stressing positive developments in Iraq, including progress in restoring electricity supplies and easing the Baghdad curfew.
But our correspondent says the Bush administration is clearly worried about the growing number of attacks on US forces, especially as American public opinion appears to be turning against the operation in Iraq.