Wednesday's announcement requires another 12,000 soldiers to be sent to Iraq and means that more US troops will be in Iraq next January than were involved in the country's invasion and occupation.
The deployment will also require more than 10,000 soldiers and marines to have their promised one-year Iraq tour limit extended.
Previously, the largest number of US troops on the ground in Iraq was 148,000 in May 2003, defence officials said.
Army Brigadier-General David Rodriguez told a Pentagon news conference on Wednesday: "At this point in time, it's going to be [a new total of] 150,000.
November was the worst US
fatality month on record
"The purpose is mainly to provide security for the elections. But it's also to keep up the pressure on the insurgency after the Falluja operation," he added.
Some 137 US soldiers were killed in Iraq in November and more than 1330 wounded, the worst month on record.
US Central Command chief General John Abizaid had indicated six weeks before the US presidential election that more troops would be needed.
Iraqi troop absence
Expressing a hope that more Iraqi troops would be trained to provide security for the 30 January 2005 elections, Abizaid said on 22 September he needed at least 140,000 soldiers and would not rule out the US making up the difference.
The Pentagon has acknowledged problems in training and equipping Iraqi security forces, and Democratic Senator Jack Reed said the troop increase came as no surprise.
"There are not enough troops to respond to 'terrorist' attacks in all areas of the country - and there are certainly not enough US or Iraqi trained forces to provide adequate security for the elections in January," he said.