Rice came from Saudi Arabia, where Bush is on the latest stop in his regional trip.
Immediately after her arrival in Baghdad on January 15, she had talks with Prime Minister Nuri al-Maliki and then met Foreign Minister Hoshyar Zebari.
Rice told a news conference she was encouraged by what she had seen and heard on this visit. "From the time that I was here a month ago, I've seen also continued progress on the political front, particularly in the reconciliation that the Iraqi people, themselves, are carrying out at the grassroots level," she said. "You are seeing citizens emerge who are determined to fight the extremists, the terrorists, the foreign fighters."
Earlier, U.S. National Security Council spokesman Gordon Johndroe, said Rice's visit was aimed at encouraging political reconciliation and "legislative action" by the Iraqi parliament.
Washington wants the government, led by Shi'ite Prime Minister al-Maliki, to use the improved security climate to make rapid progress on political reconciliation between the majority Shi'a and minority Sunni Arabs -- and the Kurds.
Bitter sectarian conflict has killed tens of thousands of Iraqis since the U.S.-led invasion in 2003 and until recently threatened to tip Iraq into all-out civil war.
That slide has for now been stopped, thanks to a "surge" in U.S. troops, that has brought relative stability to parts of the country previously torn asunder by violence.
But U.S. officials worry that if political reconciliation is not achieved soon, Iraq could return to chaos.
Reconciliation, in essence, means giving disenchanted Sunnis -- who were dominant under Saddam Hussein but have since been marginalized -- a real stake in running the government.
Some progress is being made.
On January 12, Iraq's parliament voted to allow thousands of former members of Hussein's Ba'ath Party to return to government jobs.
The United States is now pushing for more laws, including legislation on holding provincial elections as well as a key law on sharing the country's oil and gas resources among its different ethnic and religious groups.
Rice told reporters in Baghdad that Iraq and the United States will remain long-term partners. She said Iraq and the United States "have agreed that there should be long-term relationship between the two countries. We have long-term interests in common, and the most important of those is emergence of an Iraq that is unified, an Iraq that can defend itself."
Rice is to return to Saudi Arabia and is due to accompany the U.S. president on his next stop to Egypt.