However General Petraeus says the strategy employed by the military across Iraq is working and warned against any major withdrawal of troops.
In critical testimony before the bitterly divided US Congress General Petraeus said US forces could be reduced by 4,000 troops in December and could gradually hit pre-surge levels.
VIDEO: Petraeus report
But further decisions on troop numbers could not be made until next March at the earliest, he said, and lashed out at Iran for waging a "proxy war" through Shi'ite militias on the territory of its war-torn neighbour.
Earlier Democrats warned that President George W. Bush's strategy to surge 28,500 more troops into Iraq, had failed and US troops should come home.
But General Petraeus mounted a staunch defence of the strategy.
"As a bottom line up front, the military objectives of the surge are in large measure being met," General Petraeus told a joint hearing of the House Armed Services and Foreign Affairs committees.
And he warned against Democratic calls for most combat troops to be pulled out by early next year.
"A premature drawdown of our forces would likely have devastating consequences," General Petraeus said.
He said that though the 168,000 American troop strength in Iraq could start to be reduced to and beyond levels which existed before the current troop surge, further decision on force numbers could not be made until next March.
"In my professional judgment, it would be premature to make recommendations on the pace of such reductions at this time," General Petraeus said.
'Iran fighting proxy war'
The four-star general warned that Iran was using its special forces to fight a "proxy war against the Iraqi state and coalition forces in Iraq."
US ambassador to Baghdad Ryan Crocker meanwhile said a "secure, stable, democratic Iraq at peace with its neighbours is, in my view, attainable."
"The trajectory of political, economic, and diplomat developments in Iraq is upwards, although the slope of that line is not steep," he said.
At least seven anti-war protesters were thrown out of the hearing before, during and after General Petraeus's comments.
'We need to get out of Iraq'
As political tensions hit boiling point, Foreign Affairs committee chairman Tom Lantos told General Petraeus he didn't "buy" claims that victory was at hand.
"The current escalation in our military presence in Iraq may have produced some tactical successes. But strategically, the escalation has failed," he said accusing Iraqi leaders of squandering an opportunity for political reform.
"We need to get out of Iraq, for that country's sake and for our own. It is time to go — and to go now."
More political tension over the Iraq strategy was increased by a full-page advertisement in The New York Times placed by anti-war liberal campaign group MoveOn.org, reading "General Petraeus or General Betray US? Cooking the Books for the White House."
White House spokesman Tony Snow called the ad "childish." He said the Crocker and Petraeus's testimony had not been shaped by the White House.
Genral Petraeus twice stated in his remarks that he had reached his conclusions alone.
The general and ambassador were also due to appear before the Senate Foreign Relations and Armed Services committees on Tuesday.
President Bush, bound by law to provide a report on the progress of the war in by Saturday, was expected to make a televised address to the nation later in the week.