The 15-member United Nations Security Council has unanimously voted to extend the mandate of the multinational force in Iraq until the end of next year.
Iraq says foreign troops are indispensable at the moment
The move was requested by the Iraqi government, which said the troops were needed for a further year while it built up its own security forces.
The mandate will be reviewed by 15 June, or earlier if Iraq requests it.
About 160,000 foreign troops, the majority of them from the US, operate in Iraq under the UN mandate.
Iraqi Prime Minister Nouri al-Maliki said it was a top government priority for Iraqi forces to be able to assume responsibility for the country's security.
As in the past, the new commitment includes the authority for the Iraqi government to call for the mandate to be terminated before the year is out.
The new mandate will come into effect on 31 December.
The renewal came as Iraqi President Jalal Talabani visited Tehran for talks with Iranian Supreme Leader Ayatollah Ali Khamenei.
During the meeting, Ayatollah Khamenei said that the only way for security to be restored in Iraq was for US troops to leave.
The past week has been one of the bloodiest in Iraq since the American-led invasion in 2003.
On Monday, UN Secretary-General Kofi Annan told reporters in New York that drastic action was needed to prevent a civil war.