The three-month period beginning in mid-August and ending in mid-November was the most violent on record in Iraq, reaching levels that pose a "grave threat to political progress," according to a new report released by the Pentagon late Monday.

In its latest quarterly report to Congress, the Pentagon says attacks spiked 22 percent over the previous three-month reporting period and ethnic and sectarian violence the greatest threat to Iraq's security — moreso than the Sunni-based insurgency. The report warns conditions could lead to civil war exist, especially in and around Baghdad, which together with al Anbar province, are the most violent areas in Iraq.

The 49-page report — released the same day that Robert Gates took over as secretary of defense — says little political progress has been made in Iraq since the last report, and Iraqi Prime Minister Nouri al-Maliki's efforts at national reconciliation are showing no indicators of success. The report also notes the growing role of Shiite militants, who the report says were likely responsible for more civilian casualties than individuals associated with more established terrorist organizations.

The report says more Iraqis now are expressing a lack of confidence in their government's ability to improve the situation: 60 percent believe conditions in the country are worsening. Iraqis also are identifying more strongly along tribal, sect and political lines than with their national identity, the report notes.

The Pentagon report also says Operation Together Forward, the joint U.S.-Iraqi military operation begun over the summer to secure Baghdad failed to reduce sectarian violence there, with death squads adapting "to the new security environment."

Since the attack on a key Shiite mosque in Samarra last February — widely seen as triggering the sharp rise in retaliatory attacks — the report says about 460,000 Iraqis have become refugees inside their own country.

The report also points to a number of institutional problems that Iraq is facing that are preventing progress toward peace, including the training and limited abilities of Iraqi security services.

The report says coalition forces remain on track to train and equip some 325,000 Iraqis by the end of this year but the actual number of Iraqis that show up for work could be considerably fewer.

The "number of present-for-duty soldiers and police is much lower, due to scheduled leave, absence without leave and attrition," the report states.

Part of that is because Iraq has no national banking system and soldiers and police have to return home to provide paychecks to their families. The report states that absent-without-leave rates within the Iraqi army surpassed 50 percent in units that are ordered to deploy outside their normal areas of operation.

Even as more Iraqi units stand up and take the lead, the Pentagon report says Iraqi security forces will continue to rely heavily on U.S. and coalition support. The report makes no predictions about when U.S. and coalition forces would leave.

The report also notes that the 135,000 strong Iraqi police force is sliding into corruption, despite U.S. efforts.

Regarding Iran and Syria, the report says both countries are adding to the deteriorating security situation in Iraq.

"The Iranian government sees an unprecedented opportunity to bring Iraq into its sphere of influence and to prevent it from re-emerging as a threat to Iranian interests." And Syria, it adds, "continues to provide safe haven, border transit and limited logistical support to Iraqi insurgents, especially elements associated with the former Iraqi Ba'ath party. "

FOX News Nick Simeone and Mike Emanuel and The Associated Press contributed to this report.