Army General John Abizaid, head of US Central Command, told the Senate Armed Services Committee he thought the emerging political process, including the 30 January election, was helping to drive the number of fighters down.
Attacks on US forces and particularly on Iraqi police and security forces have continued.
On Monday a car bomber killed 125 people in Hilla, south of Baghdad.
But Abizaid said improved Iraqi intelligence sources and "treason within his own organisation" had lead to successes against al-Zarqawi. "And his days in Iraq are numbered," he said.
According to Abizaid no more than 3500 fighters took part in a failed attempt to disrupt the 30 January election.
US officials rarely have given estimates of the numbers involved in the fighting that arose after US-led forces invaded Iraq in 2003 and they have fluctuated greatly, up to as many as 20,000.
Abizaid said there was "no doubt that the Sunni Arab insurgency in Iraq was stronger" during the three months before the January election than the same period a year earlier.
Donald Rumsfeld said he lacked
confidence in CIA estimates
But he said US experts speculated that the fighters fielded "around 3500 or so" fighters on election day - "the single most important day for the insurgents to come out in force and to disrupt".
"And we say to ourselves: 'Why didn't they put more people in the field? Where were they?' They threw their whole force at us, we think, and yet they were unable to disrupt the elections because people wanted to vote," the general said.
Lack of confidence
He did not explicitly cite 3500 as a comprehensive assessment of rebel strength and said "there's probably a lot of room for interpretation in the numbers of the insurgency".
"I think that the voting in Iraq, the political process that's going on in Iraq, the fact that people of moderate disposition have a chance for a better future, have driven those numbers down," he said.
Defence Secretary Donald Rumsfeld and other Pentagon officials recently declined to give lawmakers estimates of the number of fighters.
Rumsfeld on 16 February said he lacked confidence in estimates by the CIA and the Pentagon's Defence Intelligence Agency.