"The government will decide on the number, characteristics and timing of the dispatch after considering the U.S. request and public opinion," said Yoon Tae-young, a spokesman for South Korean President Roh Moo-hyun.
Yoon did not clarify whether the unspecified number of new troops will be combat or non-combat forces. South Korea sent 675 non-combat troops to Iraq earlier this year.
South Korea also plans to contribute $200 million in the next four years to help rebuild Iraq, Yoon said.
Seoul's decision came two days after the U.N. Security Council unanimously adopted a U.S.-led resolution aimed at getting more troops and money to help stabilize Iraq and speed its independence.
The United States has been asking South Korea to send troops to help restore security.
South Korean officials said the United States didn't specify how many troops it wanted, but cited the Polish-led international division of 9,500 troops operating in southern Iraq as an example for South Korean involvement.
South Korea had been saying it would make a decision after considering several factors, including public opinion.
Koreans are divided over sending troops to Iraq. Some believe it would boost Seoul's military alliance with Washington, which is vital to South Korea's national security. Others say the U.S. military operations in Iraq were unjustified, and South Korea shouldn't send soldiers.
The earlier dispatch of non-combat troops prompted protests in Seoul.
Roh has also said he feared North Korea could take measures that would cause a deterioration of the situation on the Korean Peninsula if South Korea dispatches combat troops to Iraq.
On Friday, South Korea said it would seek ways to support the U.N. resolution.
"Our country, a U.N. member, will explore possible ways to participate in implementing the resolution," said Oh Joon, head of the Foreign Ministry's international organizations bureau.
The U.N. Security Council unanimously adopted the resolution Thursday, which was seen as a diplomatic victory for Washington after the bitter dispute over the war.
Some 37,000 U.S. troops are based in South Korea, a legacy of the 1950-53 Korean War.