WASHINGTON (AP) - The United States faces a “grave and deteriorating” situation after three years of war in Iraq, a high-level commission warned bluntly on Wednesday, recommending enhanced diplomacy to stabilize the country and hopefully permit the withdrawal of most combat troops by early 2008.

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“There is no path that can guarantee success, but the prospects can be improved,” the commission said after an eight-month review of a war that has resulted in the deaths of more than 2,900 U.S. troops and grown so unpopular at home that it helped trigger a Democratic takeover of Congress in last month's elections.

Portions of the report were obtained by The Associated Press.

President Bush received the report in an early morning meeting at the White House with commission members. He pledged to treat each proposal seriously and act in a “timely fashion.”

He was flanked by the commission's co-chairmen, former Secretary of State James A. Baker III, and former Rep. Lee Hamilton.

The report painted a grim picture of Iraq nearly four years after U.S. forces toppled Saddam Hussein.

It warned that if the situation continues to deteriorate, there is a risk of a “slide toward chaos (that) could trigger the collapse of Iraq's government and a humanitarian catastrophe.”

“Neighboring countries could intervene. .... The global standing of the United States could be diminished. Americans could become more polarized,” commissioners said.

The report called for the administration to try to engage Syria and Iran in diplomacy as part of an effort to bring stability to Iraq - even though Bush has said previously he would not negotiate with either country.

With diplomacy under way, the report said, the U.S. should increase the number of combat and other troops that are embedded with and supporting Iraqi Army units.

“As these actions proceed, U.S. combat forces could begin to move out of Iraq. ... By the first quarter of 2008, subject to unexpected developments in the security situation on the ground, all combat brigades not necessary for force protection could be out of Iraq.”

Bush said the 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.”

He also urged members of Congress to give serious consideration to the recommendations.

“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.

Baker, Hamilton and the other members of the commission traveled to the Capitol from the White House to present their findings to senior lawmakers.

The recommendations came at a pivotal time, with Bush under domestic pressure to change course and with the new, Democratic-controlled Congress certain to cast a skeptical look at administration policy.

Additionally, Defense Secretary Donald H. Rumsfeld, the architect of the administration's war policy, has resigned.

His replacement, Robert Gates, is on track for Senate confirmation this week after a remarkable assessment of his own - that the United States is not winning the war.

Bush has rejected establishing timetables for withdrawing troops and has said he isn't looking for “some kind of graceful exit out of Iraq.”