The new Iraqi interim government brings the country "one step closer" to democracy, President Bush said Tuesday, promising to "stand by the Iraqi people" as long as it takes to stabilize the nation.

Administration officials also said the establishment of the new government is a huge step in helping the United States win support for a new U.S.- and Britain-backed U.N. resolution aimed at making the country more stable.

The new team of leaders "represents the talent, commitment and resolve to guide Iraq through the challenges that lie ahead," Bush told reporters from the Rose Garden at the White House.

"The naming of the new government brings us one step closer to realizing the dream of Iraqis -- a fully sovereign nation with a representative government that protects their rights and serves their needs," Bush continued. "This is a very hopeful day for the Iraqi people … [and] for the American people."

But the president cautioned that the transfer of authority to a new interim Iraqi government could be accompanied by an increase, rather than a lessening, of violence.

"There's still violent people who want to stop progress. Their strategy hasn't changed. They want to kill innocent lives and shake our will. They're not going to shake our will," Bush told reporters after the naming of the new 33-member Iraqi government.

"This is a very hopeful day for the Iraqi people and the American people. It's going to send a clear signal that terrorists can't win," the president said.

Bush said he had "no role" in the selection of the leaders. But he said he believed the formation of the new government would help ease the way for a new U.N. resolution seeking to set the stage for stability in Iraq.

Earlier, his national security adviser, Condoleezza Rice (search), called the announcement "a positive step for the future of a free Iraq."

"These are not America's puppets," she said.

Bush said he had spoken earlier in the day with U.N. Secretary Kofi Annan (searchto praise the work done by the United Nations in helping to assemble the new government.

Annan said in New York that the process of choosing an interim government wasn't perfect but the United Nations did "exactly what we set out to do."

"It was never intended that the United Nations will go and appoint and impose a government on the Iraqis," he said. "We have to discuss it and given the circumstances and the factors on the ground, it is not surprising that you have a mix of people from the Governing Council and from outside who are forming the new government."

In particular, Bush praised the work of U.N. envoy Lakhdar Brahimi.

"Consulting with hundreds of Iraqis from a variety of backgrounds, Mr. Brahimi has recommended a team that possesses the talent, the commitment and the resolve to guide Iraq through the challenges that lie ahead," Bush said.

Resolution Wars

Calling Tuesday "a good day for the Iraqi people," Secretary of State Colin Powell told reporters Tuesday that "we will now move forward with our work on the resolution."

Noting that resolution talks were set to begin at the United Nations in New York on Tuesday, Powell said U.S. and British officials would consult the new Iraqi government on the basis of which coalition forces will be in Iraq and the future relationship between the new government and coalition military forces.

U.S. Ambassador John Negroponte (searchhas called the U.S.-British draft "a good resolution" that could be fine-tuned but doesn't need to be rewritten.

Many other council members have called it a good starting point, and a Chinese proposal and comments by the French, German and Russian ambassadors clearly indicate they want substantive changes.

Bush called German Chancellor Gerhard Schroeder on Memorial Day, urging that the two nations work together on the resolution, the White House said.

A senior government official in Germany said Tuesday that Schroeder told Bush that Germany would "work constructively" on a U.N. resolution paving the way for an Iraqi government.

But the German official said it was too early to tell whether a U.N. Security Council deal would come before Bush hosts the Group of Eight summit of leading industrial nations next week.

Iraq 'Moving Forward'

Bush said that while the interim Iraqi council was being given "full sovereignty," U.S. troops would remain. He cited comments earlier in the day by Iraq's new prime minister, Iyad Allawi, that Iraq needs help from U.S. and other multinational forces to help defeat "the enemies of Iraq."

"I am confident" that the new Iraqi leadership want the U.S. military to remain, Bush said. "People on the ground...the Iraqis, feel comfortable in asking us to stay."

"The naming of the new interim government brings us one step closer to realizing the dream of millions of Iraqis: a fully sovereign nation with a representative government that protects their rights and serves their needs," Bush said.

Earlier, Rice hailed the development, calling it "a positive step for the future of a free Iraq."

Of the makeup of the new government, Rice said, "I can tell you firmly and without any contradiction, this is a terrific list and really good government and we're very pleased with the names that emerged."

Rice portrayed the formation of the new government as an "extremely important" step to begin to end the U.S.-led occupation of the country.

"That process is now very much under way with this excellent government that Mr. Brahimi has been able to put together," she said.

However, Rice warned that "it is possible there could be an increase in violence for a while" as Iraqi militants test the power of the new government.

"In the short term you could see more violence," she said. "The important thing is the political process is under way and is continuing," she told a White House briefing.

Powell said, "We're pleased that a number of qualified candidates were available. I'm very pleased with the outcome. It's exactly what we wanted Mr. Brahimi to do and he has performed his task very, very well."

Rice said she believed nations that had been skeptical of U.S. policy on Iraq might now be more willing to support such a U.N. resolution, given the changed political landscape in Iraq. "I do believe people see this as now moving forward," she said.

The Associated Press contributed to this report.