US Secretary of State Colin Powell has praised Bangladesh for being "an elegant, compelling and greatly needed voice of moderation".
On a brief visit to Dhaka he said that the country was an important ally in the war against terrorism and was quick to contribute towards the relief effort in Afghanistan.
Most Bangladeshis object to Mr Powell's government's role in Iraq
Mr Powell said he discussed the possibility of Bangladesh deploying troops in Iraq during his meeting with Bangladeshi Foreign Minister, Morshed Khan.
The meeting took place in Dhaka after Mr Powell arrived in the Bangladeshi capital on a brief visit on his way to Jordan from Cambodia.
While confirming that the issue of deployment was discussed, Mr Powell said he did not make any special request for troops.
But he said Bangladesh was aware of the United Nations Resolution 1483 which calls upon all the members states to assist as appropriate.
"This is a matter for ultimately the government to decide, not for the United States to demand," Mr Powell told reporters.
"It's up to them to decide what might be an appropriate contribution."
There were relatively few protests
On other areas, Mr Powell said Bangladesh had made successful efforts to improve the rule of law, close down unprofitable state-owned state enterprises and lower infant mortality rates.
Mr Powell said that America was now Bangladesh's main trading partner, receiving one-third of its total exports.
But he cautioned that the country still faced many daunting challenges.
"Bangladesh's democracy stands out for the enormous strides it has made over the years. There can and must be many more strides forward," Mr Powell told reporters.
"Whatever the differences between political parties, the people of Bangladesh need their leaders to pull together if the country is to continue to move ahead.
A BBC correspondent in Dhaka says the Bangladesh Government will be pleased with the secretary of state's upbeat assessment of their country.
He made no reference to the opposition Awami League's complaints of rising lawlessness, nor did he comment on allegations that some independent journalists have been persecuted by the authorities.
Our correspondent says the government will also be gratified that there were few public protests over Mr Powell's visit, even though the overwhelming majority of people were opposed to the war in Iraq.