(CNN) -- President Bush on Thursday said "serious and complex challenges" remain in Iraq that will prevent further withdrawals of U.S. troops this summer despite a reduction in violence in the past year.

President Bush said Thursday that there is "much work ahead" in Iraq but that progress is being made.

Speaking after two days of congressional testimony by the top U.S. officials in Iraq, Bush credited his deployment of nearly 30,000 additional troops last year for a "major strategic shift" in the conflict.

The president also announced he will reduce combat tours from 15 to 12 months, citing the heavy strain on troops and their families.

The shortened tours would apply only to troops deployed on or after August 1 and would not cut back tours for those currently in Iraq.

"Our nation owes a special thanks to the soldiers and families who have supported this extended deployment," Bush said.

Bush's progress report on Iraq comes after he met with Gen. David Petraeus, the top U.S. commander in Iraq, and Ryan Crocker, U.S. ambassador to Iraq. Watch what Bush says about the pause in withdrawals »

Petraeus and Crocker spent two days this week on Capitol Hill testifying on the status of the 5-year-old war.

The president said there is "much work ahead" in Iraq but noted cooperation from the Iraqis is stronger than ever.

"All our efforts are aimed at a clear goal: a free Iraq that can protect its people, support itself economically and take charge of its own political affairs. No one wants to achieve this goal more than the Iraqis themselves," he said.

The president said Iraq is moving forward on the economic front and is expected eventually to shoulder the full burden of its security costs.

Bush also warned Iran against arming Shiite Muslim militants in Iraq, saying that the Islamic republic "has a choice to make."

"If Iran makes the wrong choice, America will act to protect our interests, our troops and our Iraqi partners," he said.

Petraeus on Tuesday recommended that troop withdrawals from Iraq be paused for 45 days after July when U.S. forces in Iraq will be reduced to 140,000. Watch Petraeus explain the role of U.S. troops in Iraq »

Bush accepted this recommendation Thursday, saying Petraeus will "have all the time he needs."

Asked whether further reductions could resume after the pause, Petraeus told lawmakers earlier this week that future troop levels should be based on conditions on the ground.

"War is not a linear phenomenon," he said. "It's a calculus, not arithmetic."

Defense Secretary Robert Gates ordered Army tours in Iraq and Afghanistan extended to 15 months in April 2007 to sustain the additional deployment to Iraq -- but top Army officials have warned that the war has left the service "out of balance," as Gen. Richard Cody, the service's vice chief of staff, told a House committee Wednesday.

Gates said in a Senate hearing Thursday afternoon that he did not expect Petraeus' review to be lengthy, adding that he hoped there would be further troop withdrawals in the fall.

Sen. Carl Levin of Michigan, a Democrat critical of the conduct of the war in Iraq, seized on the differing views.

"What recommendation did President Bush adopt a few hours ago? Gen. Petraeus' open-ended approach or Secretary Gates' brief pause?" he demanded. "The answer is Gen. Petraeus'."

Despite Gates' professed optimism about further troop withdrawals, he acknowledged that levels will not fall as low as 100,000 by January of next year, as he had hoped in September 2007.

The Democratic leaders of Congress, who have pushed unsuccessfully to end the war since winning control of the House and Senate in 2006, said Bush's speech showed the president plans to leave the widely unpopular war in the lap of his successor when he leaves office in 2009.

"The president has a timeline -- January 20th of next year," Senate Majority Leader Harry Reid said. "Our troops also need a timeline."

"The president still doesn't understand that America's limited resources cannot support this endless war that he's gotten us involved in," Reid said. Watch Reid's harsh words for Bush »

"His announcement -- while some look to as a great victory -- is, I say, two steps backward and one step forward."

House Speaker Nancy Pelosi, D-California, said that "we need better answers from the president."

"The president has taken us into a failed war, he's taken us deeply into debt and he's taking -- that debt is taking us into recession. We need some answers from the president," she said.

The war in Iraq has claimed more than 4,000 U.S. lives and cost an estimated $600 billion since 2003. It is widely unpopular at home, with a March CNN poll showing about two-thirds of the country opposes the conflict.

After Petraeus and Crocker finished their first progress report to Congress in September, the president addressed the nation in prime time.

Bush was set to head to Texas later Thursday for a few days of rest at his Crawford ranch. E-mail to a friend

CNN's Ed Henry contributed to this report.

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