In the report, Peter Rodman, assistant secretary of Defense for International Security Affairs, said the formation of a unity government on May 20 was a major milestone in the country's reconstruction.

Air Force Lt. Gen. Victor Renuart, the Joint Staff's director for strategic plans and policy, said violence remains concentrated in four of Iraq's 18 provinces, but noted "substantial improvement even in the toughest locations."

Quoting the report, the American Forces Press Service said as of mid-May, 111 Iraqi army and special operations battalions are conducting counterinsurgency operations, up 9 percent since the last progress report to Congress.

In addition, 71 Iraqi battalions are leading operations, some independently, and 51 battalions now control their own battle space.

The number of trained and equipped Iraqi forces has topped 263,000 at mid-month, which includes almost 118,000 soldiers, sailors and airmen, an increase of 11,000 since the February progress report, and more than 101,000 police, up almost 19,000 since February.