Two senior U.S. officials said the report describes a troubling picture of the political and security situation in Iraq.
The developments come amid continued violence in Iraq. A truck bombing Wednesday morning on an Italian police station in the southern Iraqi city of Nasiriyah killed at least 24 people. Italian officials confirm 16 of their people were killed, while a coalition spokesman says eight Iraqis also died.
A Carabinieri official in Rome, Maj. Roberto Riccardi, said the building was in flames, and that some Italians may be under the debris, although details were difficult to come by because communication had been severed.
In other developments:
The new intelligence report suggests spiraling violence and a lack of confidence in the U.S.-appointed Iraqi Governing Council may be bringing efforts to a turning point, sending more Iraqis over to the side of insurgents fighting occupation troops, said two officials speaking on condition of anonymity.
Asked about the increase in guerrilla attacks on coalition forces in Iraq, Sen. John McCain, R-Ariz., told CBS News' The Early Show Wednesday that "these are very intelligent moves that the bad people are making ... time is not on our side."
Because the report is classified, officials talked about it only in general terms and only on grounds they not be publicly identified. The officials declined to furnish details.
On the subject of the increasing violence, one official noted that American forces already are using more aggressive raids and other tactics to try to fight insurgents, which officials fear could alienate more Iraqis. For instance, American forces responded with aerial bombing and mortars over the weekend in a show-of-force response to the downing of a U.S. helicopter last week.
In Washington, President Bush and Vice President Dick Cheney sat down with L. Paul Bremer, the top U.S. administrator in Baghdad, at a National Security Council meeting also attended by Defense Secretary Donald H. Rumsfeld, Secretary of State Colin Powell and National Security Adviser Condoleezza Rice.
The urgency of the talks was underscored by the fact that Rumsfeld delayed takeoff for a trip to Asia to attend the White House session and Bremer was hurriedly summoned from Baghdad.
"It is an important phase we're in," White House spokesman Scott McClellan said. "We are having some serious consultations about how we move forward."
One option under consideration: naming a new interim Iraqi leader with authority to govern the country until a constitution can be written and elections held, an administration official said. That would be patterned after the model of Afghanistan.
The talks came at a time when Iraqi insurgents have stepped up attacks – resulting in the bloodiest week for American soldiers since the end of major combat operations – and as U.S. and Iraqi leaders struggle over how to draft a new constitution, a key step in handing over power to the Iraqis.
With a re-election battle ahead, Mr. Bush faces a rising casualty toll in Iraq and criticism that he lacks a strategy for postwar Iraq. As of Monday, the U.S. death toll was 394.
McCain said more U.S. troops are needed in Iraq. He said the situation there is deteriorating and "we need more boots on the ground."
"This situation has got to be reversed ... if this trend continues we are in serious difficulty," he said.