Some 20,000 US troops now serving in Iraq will have their tour of duty extended, Defence Secretary Donald Rumsfeld has announced.
This is a test of will, Mr Rumsfeld said
Mr Rumsfeld said they would spend another 90 days in Iraq beyond their original one-year deployment.
"The country is at war and we need to do what is necessary to succeed," he told a news conference.
The announcement comes as the US-led coalition faces the biggest outbreak of violence since Saddam Hussein's fall.
Mr Rumsfeld said the extension came in response to a request by the commander of US forces in Iraq, Gen John Abizaid.
"We are engaged in a test of will and we will meet that test," Mr Rumsfeld told reporters.
"A small band of terrorists are not going to be permitted to determine the fate of the 25 million Iraqi people," he added.
Mr Rumsfeld commented on the revolt by Shia militiamen loyal to radical cleric Moqtada Sadr, saying that "Sadr's bid to foment a popular uprising is failing".
He also said the coalition was now containing the situation in the flashpoint town of Falluja, where US troops launched an offensive against Sunni insurgents in response to the killing and mutilation of four civilian contractors.
Hundreds of people were killed in the fighting there before a fragile truce came into force.
"The terrorists and the leftovers of Saddam Hussein's regime... have a strategy. Their objective is to break the will of the American people and drive the US and coalition forces out of Iraq to foment civil war among Iraqis," Mr Rumsfeld said.
"Their strategy is failing. Far from leaving, coalition forces
have responded forcefully to recent attacks."
The defence secretary dismissed Arab television news reports that that the dead in Falluja included hundreds of Iraqi civilians, calling the accounts "vicious, inaccurate and inexcusable".
Earlier, the chairman of US joint chiefs of staff, Gen Richard B Myers, said during a visit to Baghdad that the US siege of Falluja was "humane".
At least 87 US soldiers have died in action across Iraq this month, while five international non-governmental organisations together counted at least 470 Iraqi dead in Falluja alone last week, Reuters news agency reports.
"There has never been a more humane campaign," Gen Myers said, "and that goes for operations in Falluja."
New fighting in the city could not be ruled out despite a truce, he added.
He also traced a "common thread" between Sunni gunmen in Falluja and Mr Sadr's Shia militants.
"The common thread is... to stop progress in Iraq," he said, accusing militants in both communities of seeking to destroy the country's new institutions.
Gen Myers was speaking as Mr Sadr continued to hold out in the holy city of Najaf, where he is protected by his Mehdi Army militia while US-led coalition forces mass outside.