US President George W Bush has said hope is returning to Iraq following the US troop surge last year.
Visiting a US base in Kuwait, Mr Bush said the withdrawal of 20,000 troops by July was on track, but no decision had been taken to bring home more.
Mr Bush was briefed by the head of US forces in Iraq, General David Petraeus.
The US president went on to Bahrain - the latest stage of a Middle Eastern tour that has included meetings with Palestinian and Israeli leaders.
Correspondents say he is trying to persuade some of his key Arab allies to support his peace initiative.
Mr Bush also urged Iran and Syria to do more to reduce violence in Iraq.
Later Gen Petraeus said that attacks in Iraq linked to Iranian "explosively formed projectiles" had doubled or even trebled in recent days.
Mr Bush met Gen Petraeus and Ryan Crocker, the US ambassador in Iraq, at a command centre at the US base at Arifjan, where an intelligence team monitors developments on the ground in Afghanistan, the Middle East and the Horn of Africa.
Gen Petraeus and Mr Crocker briefed the president on the improving security situation in Iraq.
Mr Bush said the increase in US troop levels by 30,000 last year had turned Iraq into a country where hope was now returning.
"The new way forward I announced a year ago changed our approach in fundamental ways," he said.
"Iraq is now a different place from one year ago. We must do all we can to ensure that 2008 will bring even greater progress," he said.
No further decision would be taken on bringing troops home, he said, although plans to withdraw 20,000 by the middle of the year were on track.
Any new reduction of troop levels would depend on conditions on the ground, he added, and it was up to Gen Petraeus to decide whether this was possible.
Gen Petraeus is due to brief the president again in March.
After rounding off his first trip as president to Israel and the West Bank, Mr Bush held talks with Kuwait's emir, Sheikh Sabah al-Ahmed al-Jaber al-Sabah.
The president later visited Bahrain where he met the king, Sheikh Hamad bin Isa al-Khalifah.
Mr Bush met the king of Bahrain as part of his tour of the Gulf
He will then visit Saudi Arabia and the United Arab Emirates.
Mr Bush's aim is to encourage them to back Palestinian Authority President Mahmoud Abbas as he negotiates with the Israelis.
This is phase two of what many regard as "mission impossible", the BBC's Matthew Price reports from Kuwait City.
Mr Bush hopes to encourage states like Kuwait to start a process of reaching out to Israel.
One problem, our correspondent notes, is that what concerns Gulf states like Kuwait the most is not the Israeli-Palestinian issue, but Iran and Washington's intentions towards it.
Gulf leaders will be telling Mr Bush they want the stand-off resolved peacefully, not through military means, our correspondent says.