The top U.S. commander in Iraq has accused Iran of increasing its involvement in the Shiite insurgency in Iraq, and using its allies to launch attacks on U.S. forces. At a news conference at the Pentagon, General George Casey also said Sunni insurgents have been increasing their efforts to make peace with the new government. But he indicated that he will not be able to recommend further reductions in U.S. forces in Iraq until he has had a chance to work more with Iraq's new leaders.

General George Casey (l) and Defense Secretary Donald Rumsfeld

General Casey says Iran has become one of the major factors in the security situation in Iraq.

"They are using surrogates to conduct terrorist operations in Iraq, both against us and against the Iraqi people," said General Casey.

U.S. officials have complained in the past about Iran providing technology, equipment, training and radical ideology to Iraqi Shiite groups. But General Casey indicated the activity has reached a new level in recent months.

"Since January, we have seen an upsurge in their support, particularly to the Shia' extremist groups," he said. "Their Quds force, their covert special operations forces, are the ones that are directing this. Now, you would assume that they're not doing that independently, that there is some central direction from somebody in Tehran."

General Casey says there has been an increase lately in the use by Iraqi insurgents of sophisticated bombs with projectiles, technology he says comes primarily from Iran. But he says there is no evidence of Iranian operatives actually working inside Iraq to direct the insurgency.

While the general says Iran is fueling Iraq's Shiite insurgency, he also says members of the Sunni insurgency - made up largely of former members of the Saddam Hussein regime - are increasing efforts to make peace with the new Iraqi government.

"The Sunni insurgency has been, since the elections, reaching out and looking for ways to reevaluate their options and to come out of the resistance against occupation with honor," noted General Casey. "And we and the Iraqi government have several different strands of contact going on. And there are opportunities in that regard that we just haven't had before."

General Casey said last year that he hoped to be able to recommend what he called "fairly substantial reductions" in U.S. troops in Iraq by about now. On Thursday, he said he can not yet do that because he has not had enough time to work with the new Iraqi government, particularly the ministers of Defense and Interior, who were named only two weeks ago. But he said the baseline number of U.S. troops in Iraq has gone down from 138,000 to 126,000.

But the general also warned that the number of U.S. troops in Iraq could also go up, either as part of normal rotations or if the security situation deteriorates.

"I am confident that we will be able to continue to take reductions over the course of this year," he said. "It's both the security situation and the progress of the Iraqi security forces. What we've always said was there would be a gradual reduction, over time, as the Iraqi security forces assumed a larger and larger role."

General Casey also disputed an article published in the Washington Post newspaper this week by Iraq's national security advise. The article said there is an agreement to reduce the U.S. troop level to fewer than 100,000 by the end of the year. The general says there is a process for moving individual provinces to full Iraqi control, but that is not linked to any specific numbers of U.S. troops.

He also indicated he is pleased that shortly before he spoke the U.S. congress rejected an attempt to set a timeline for U.S. troop withdrawals. He says such a move would limit his flexibility, help the insurgents and send the wrong signal to the new Iraqi government.