"The battle in Iraq is noble, it is necessary, and it is just. And with your courage the battle in Iraq will end in victory," he told an audience of Pentagon brass, soldiers and diplomats.
The president strongly signaled that he won't order troop withdrawals beyond those already planned because he refuses to "jeopardize the hard-fought gains" of the past year.
He added that last year's troop buildup has turned Iraq around and produced "the first large-scale Arab uprising against Osama bin Laden."
Mr. Bush also said he has no doubts about launching the unpopular war in Iraq despite the "high cost in lives and treasure," arguing that retreat now would embolden Iran and provide al Qaeda with money for weapons of mass destruction to attack the United States.
Anti-war protests and vigils were planned throughout the day around the nation. In Ohio, more than 20 different vigils, rallies, marches and other events were planned.
In Washington, D.C., a marching band led protesters down the street near the National Mall and around the IRS building before dozens of demonstrators gathered at the entrance.
Protesters blocked the main entrance for a time, but no federal workers appeared to be trying to use those doors. Police detained 13 people who sat down at a side entrance.
The demonstrators said they were focusing on the IRS because it gathers taxes that are used to fund the war.
Mr. Bush warned against backsliding from the recent progress fueled by the increase of 30,000 troops ordered more than a year ago.
The president said "having come so far and achieved so much, we are not going to let this happen."
"The challenge in the period ahead is to consolidate the gains we have made and seal the extremists' defeat," he said. "We have learned through hard experience what happens when we pull our forces back too fast the terrorists and extremists step in, fill the vacuum, establish safe havens and use them to spread chaos and carnage."
Mr. Bush criticized those who "still call for retreat" in the face of what he called undeniable successes.
Democrats took a different view.
"On this grim milestone, it is worth remembering how we got into this situation, and thinking about how best we can get out," said Rep. John Dingell, D-Mich. "The tasks that remain in Iraq - to bring an end to sectarian conflict, to devise a way to share political power and to create a functioning government that is capable of providing for the needs of the Iraqi people - are tasks that only the Iraqis can complete."
Mr. Bush defended the war as necessary at first, now, and for an undefined future until Iraq is stable enough to stand on its own.
"The surge has done more than turn the situation in Iraq around it has opened the door to a major strategic victory in the broader war on terror," the president said. "In Iraq, we are witnessing the first large-scale Arab uprising against Osama bin Laden, his grim ideology, and his terror network. And the significance of this development cannot be overstated."
The president's address sought to shift the nation's focus from economic ills and put Iraq back on the front burner, part of a series of events the White House planned around the anniversary and next month's report from the top U.S. figures in Iraq, Gen. David Petraeus and Ambassador Ryan Crocker.
However, Americans continue to think the results of the war have not been worth the loss of American lives and the other costs of attacking Iraq, according to a new CBS News poll.
It is widely believed that the president will endorse a recommendation from Petraeus for no additional troop reductions, beyond those already scheduled, until at least September. This pause in drawdowns would be designed to assess the impact of this round before allowing more.
Petraeus, the top American commander in Iraq, told CBS News correspondent Cami McCormick that he will make recommendations on troop levels to Congress next month based on "the feel of people... who have been here for some time."
Five of 20 Brigade Combat Teams - a Marine Expeditionary Unit and two Marine battalions - are scheduled to leave by July, reports McCormick. Already, two Army brigades have departed Iraq, one based in Diyala province, the other in Baghdad.
Vice President Dick Cheney, who just completed a two-day visit to Iraq, said the administration won't "be blown off course" by continued strong opposition to the war in the United States.
Cheney compared the administration's task now to Abraham Lincoln's during the Civil War. "He never would have succeeded if he hadn't had a clear objective, a vision for where he wanted to go, and he was willing to withstand the slings and arrows of the political wars in order to get there," Cheney said of Lincoln in an interview broadcast Wednesday on ABC's "Good Morning America."
The U.S. has about 158,000 troops in Iraq. That number is expected to drop to 140,000 by summer in drawdowns meant to erase all but about 8,000 troops from last year's increase.
Mr. Bush has successfully defied efforts by the Democratic-led Congress to force larger troop withdrawals. Still, with just 10 months before he hands off the war to a new president, Mr. Bush is concerned about his legacy on Iraq.
Both Democratic candidates have said they would begin withdrawing forces quickly if elected. Only expected GOP nominee John McCain has indicated he planned to continue Mr. Bush's strategy of bringing troops home only as conditions warrant.
The surge was meant to tamp down sectarian violence in Iraq so that the country's leaders would have time to advance legislation considered key to reconciliation between rival Shiite, Sunni and Kurdish communities. But the gains on the battlefield have not been matched by dramatic political progress, and violence again may be increasing.
Mr. Bush appeared to be referring to recent cooperation by local Iraqis with the U.S. military against the group known as al Qaeda in Iraq, a mostly homegrown, Sunni-based insurgency. Experts question how closely - or even whether - the group is connected to the international al Qaeda network. As for bin Laden, he is rarely heard from and is believed to be hiding in Pakistan.
As of Tuesday, at least 3,990 members of the U.S. military have died in the war, which has cost the U.S. roughly $500 billion. Nobel Prize-winning economist Joseph E. Stiglizt and Harvard University public finance expert Linda Bilmes have estimated the eventual cost at $3 trillion when all the expenses, including long-term care for veterans, are calculated.
Without specifics, Mr. Bush decried those who have "exaggerated estimates of the costs of this war."
"War critics can no longer credibly argue that we are losing in Iraq, so now they argue the war costs too much," he said.