The inauguration of Iraq's new government marks a new era in relations with the country that the United States has occupied for more than three years, President Bush said Sunday.

"The formation of a unity government in Iraq is a new day for the millions of Iraqis who want to live in peace," Bush said. "And the formation of the unity government in Iraq begins a new chapter in our relationship with Iraq."

Bush briefly spoke to reporters from the White House with his wife, Laura, at his side, as he contrasted the political development with the violence that still rages in Iraq.

CountryWatch: Iraq

The president did not mention the spree of bombing, mortar rounds and a drive-by shooting that killed at least 18 Iraqis and wounded dozens — most of them hit by a homicide bomber who targeted a Baghdad restaurant during Sunday's lunch hour.

Bush said he called President Jalal Talabani, Prime Minister Nouri al-Maliki and parliament speaker Mahmoud al-Mashhadani to congratulate them on working together.

"I assured them that the United States will continue to assist Iraqis in the formation of a new country because I fully understand that a free Iraq will be an important ally in the war on terror, will serve as a devastating defeat for the terrorists and Al Qaeda and will serve as example for others in the region who desire to be free."

Secretary of State Condoleezza Rice said Iraq has made "extraordinary progress politically" by inaugurating the government even though sectarian infighting has stalled the selection of Cabinet posts for overseeing the army, police forces and national security.

"They want to make sure that they have it right," Rice said. "I think it's quite obvious that when you take this kind of time, it shows the kind of determination and maturity."

Rice said U.S. Embassy officials in Baghdad told her that 90 percent of the Iraqi parliament will support the new government.

"We really need to give this government a chance," she told "FOX News Sunday."

"And we need to recognize that with the very difficult things that they are trying to do, they are making extraordinary progress politically."

The U.S. hopes the new government will help clear the way for the withdrawal of American troops.