Bush said he endorses Army Gen. David Petraeus' assessment that there should be a period of assessment and evaluation after the current troop drawdown ends in July.

"He'll have all the time he needs" to evaluate and assess the U.S. troop presence in Iraq, Bush said.

Bush said he directed that the troop deployment will drop from 15 months to 12 months, effective Aug. 1. He said he also would ensure units have a year home "for every year in the field."

As the Middle Eastern country becomes "a free Iraq that can protect its people, support itself economically and take care of its political affairs," Iran will have a choice, Bush said.

Iran, which has backed anti-American militias, can have a peaceful relationship with Iraq, which America would support. If it chooses to continue to fund terrorists, "America will protect our interests," Bush said.

Bush also pressed Congress to pass the "fiscally responsible" $108 billion war funding request that provides troops needed resources and doesn't hamstring military leaders or contain a withdrawal timetable.