The 10-member panel, known as the Iraq Study Group, includes some of the most influential figures in both Bush's Republican Party and the opposition Democratic Party. For nine months it has been studying the problems in Iraq and today it issued it's report.
The group recommends that the Bush administration pay greater attention to diplomacy in the Middle East in an effort to reverse what it calls Iraq's "grave and deteriorating" status.
U.S. Ability To Influence Events 'Diminishing'
At a news conference where the panel released its report to the public, the group's co-chairman, former Democratic Congressman Lee Hamilton, said it's time for Bush make a significant change in course.
"The current approach is not working and the ability of the United States to influence events is diminishing," he said.
His co-chairman, Republican former Secretary of State James Baker, acknowledged that the group was not offering a plan to fix the problems in Iraq quickly. But he said a careful diplomatic effort eventually could bring success.
"Ladies and gentlemen, there is no magic formula that will solve the problems of Iraq. But to give the Iraqi government a chance to succeed, United States policy must be focused more broadly than on military strategy alone or on Iraq alone," Baker. "It must seek the active and constructive engagement of all governments that have an interest in avoiding chaos in Iraq, including all of Iraq's neighbors."
The panel, which has spent the past nine months collecting thoughts from U.S. and regional experts, said if Iraq becomes even more unstable, the government in Baghdad could collapse and the country will be faced with a humanitarian catastrophe.
The report warns that this could destabilize the entire Middle East if Iraq's neighbors find it necessary to intervene militarily. It also could affect the United States, the panel said, weakening its international standing and further polarizing domestic politics.
A Dialogue With Syria, Iran
The group concluded that an enhanced diplomatic effort could prevent further deterioration of the situation in Iraq. That would include somehow negotiating with neighboring Syria and Iran, which Bush has so far refused to do.
As diplomatic efforts proceed, the panel said, the United Sates should shift its military focus in the country gradually away from direct combat and toward a support role for Iraqi forces. It said this could soon lead to some U.S. troop withdrawals.
By the first quarter of 2008, barring unexpected incidents, the report said the only U.S. combat forces remaining in Iraq would be those needed to protect Iraqi troops.
Bush received the report this morning at a White House breakfast meeting with the 10 members of the Iraq Study Group. Afterward he said he'll consider its recommendations fairly.
"This report, called 'The Way Forward,' will be taken very seriously by this administration," he said. "This report gives a very tough assessment of the situation in Iraq. It is a report that brings some really very interesting proposals, and we will take every proposal seriously, and we will act in a timely fashion."
Bush promised to work closely with Congress on ways to end the fighting in Iraq.
"I urge the members of Congress to take this report seriously. While they won't agree with every proposal, and we probably won't agree with every proposal, it nevertheless is an opportunity to come together and to work together on this important issue," he said.
The Public Is Watching
During his six years in office so far, Bush has worked with a Congress controlled by fellow Republicans. In January, he'll have to work with Democrats, who will then hold the majority.
There will be considerable pressure upon Bush to accept many of the Iraq Study Group's recommendations, given the experience and standing of the members of the committee.
Baker was secretary of state under Bush's father, former President George H.W. Bush, and he is also a close friend and influential adviser to the Bush family.
The other co-chairman, Hamilton, is a former member of the House of Representatives who served for years as chairman of the House International Relations Committee. He is widely viewed as one of the country's most thoughtful and articulate foreign-policy experts.
And Robert Gates, Bush's nominee to replace U.S. Secretary of Defense Donald Rumsfeld, was a member of the committee until he stepped down to accept the nomination.
All this provides strong reasons within Bush's own Republican Party to fully consider the committee's recommendations.
At the same time, the Democrats' victory in last month's congressional elections has created strong public expectations that the president will adjust his Iraq policy. The vote was widely seen as an unofficial referendum on the administration's handling of the war.
The Imam Al-Mahdi Army on parade (epa)
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THE COMPLETE PICTURE: Click on the image to view RFE/RL's complete coverage of events in Iraq and that country's ongoing transition.