Even the best-case scenario for Iraq is a political, economic and security situation described as tenuous.
The National Intelligence Estimate predicts three possible scenarios: tenuous stability, political fragmentation, or civil war.
The 50-page document, prepared in July before the latest upsurge in violence brought a sharp increase in Iraqi civilians killed and attacks on American troops, has yet to be officially released.
A spokesman for the national security council, Scott McCormack, confirmed its existence and remained upbeat, but refused to discuss the details.
"In the past, including before the war to liberate Iraq, there were many different scenarios that were possible, including the outbreak of civil war. It hasn't happened," he said.
"The Iraqi people continue to defy the predictions of pundits and others."
Meanwhile, even Republican senators described the administration's reconstruction efforts as "beyond pitiful" and "exasperating from any vantage point," when the White House sought to divert $3bn from reconstruction to security.
The administration dismissed the criticism, the White House spokesman Scott McClellan calling critics "pessimists and hand-wringers".
The estimate was commissioned by the outgoing CIA director, George Tenet, who told Mr Bush that the intelligence case for Iraq's ownership of weapons of mass destruction was a "slam dunk".
That prediction, alongside the one that the Iraqi people would greet the US and British soldiers like liberators, failed to materialise, leaving many in Mr Bush's national security team gloomy.
"There doesn't seem to be much optimism," an official told Reuters.
"There is a significant amount of pessimism," an officer told the New York Times.
Despite stiff criticism from those Republican and Democratic senators who believed the situation might be spiralling out of control, the administration brushed off the bleak conclusions about Iraq's immediate future.
"You know every step of the way in Iraq there have been pessimists and hand-wringers who said it can't be done," Mr McClellan said.
"And every step of the way the Iraqi leadership and the Iraqi people have proven them wrong because they are determined to have a free and peaceful future."
More than 1,000 US soldiers have been killed in the conflict so far, and between 12,700 and 14,800 Iraqi civilians, according to the website Iraqbodycount.org, which keeps a tally based on at least two approved news sources.
The Democratic presidential challenger, John Kerry, seized on the leaks, saying that it was unlikely that Iraq would be ready to hold elections by January.
"I think it is very difficult to see today how you're going to distribute ballots in places like Falluja and Ramadi and Najaf and other parts of the country, without having established the security," he said.
"I'm not sure the president is being honest with the American people about that situation either, at this point."
At a hearing to discuss the White House's requests to divert more than $3bn (about £1.6bn) from aid to security, senators of both main parties lambasted the lack of progress on the ground.
So far less than $1bn of the $18.4bn allocated has been spent.
The Republican chairman of the foreign relations committee, Senator Richard Lugar, said the situation in Iraq was "exasperating for anybody to look at from any vantage point".
Referring to the lack of overall spending on aid, Senator Chuck Hagel, a Republican from Nebraska, said: "It's beyond pitiful, it's beyond embarrassing. It is now in the zone of dangerous."
But the most excoriating attack came from the Democrat Senator Joseph Biden.
"The president has frequently described Iraq as 'the central front of the war on terror'," he said. "Well by that definition, success in Iraq is a key standard by which to measure the war on terror. And by that measure, I think the war on terror is in trouble."
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