The mandate does not expire until the end of the year when Iraq is expected to have a permanent government in place.
Baghdad, however, can ask the 140,000 US troops and the 20,000 from 27 other nations to leave before then.
But the council on Tuesday, in a review of the operation, agreed the mandate should be continued "until the completion of the political process" as in its resolution 1546, adopted in May 2003, said Danish Ambassador Ellen Loj, the current council president.
Iraq's Foreign Minister Hoshyar Zebari told the council Iraq needed the troops because a "campaign of destruction and intimidation" by fighters had intensified since the formation of an Iraqi government on 28 April, and would continue during the drafting of a new constitution in the coming months.
Russia held up the council's decision for several hours to
make sure references to the May resolution, which put a
timeline on the foreign troops, was included.
Iraq's foreign minister has said his country still requires help from US-led forces to maintain security.
The presence of US-led forces is
detested by many in Iraq
In a letter to the council last week, Hoshyar Zebari urged members to renew the mandate for US-led forces currently in Iraq.
He reiterated the appeal on Tuesday, saying Iraqi forces cannot yet defend the country against anti-US forces.
"We in Iraq still face a destructive campaign of terror and violence that aims at derailing the political process and undoing the progress that has been achieved so far," Zebari said.
But he said the elections for a transitional government on 30 January "sent a loud and clear message" that the Iraqi people "will not be intimidated, nor will their future be dictated by terrorists and supporters of tyranny".
Zebari told the UN Security Council on Tuesday that Iraq's neighbours, especially Syria, should do more to prevent foreign "extremists" from crossing into Iraq, where their goal is to undermine the country's new Shia-led government.
There are around 160,000 foreign
soldiers in Iraq
He said Iraq has repeatedly urged its neighbours to prevent "terrorists" from entering the country.
He welcomed a statement by Syria that it had stopped more than 1000 foreign fighters, but said it confirmed Iraq's long-held view "that Syria has been one of the main transit routes for foreign terrorists, as well as for remnants of the previous regime".
He urged Damascus to do more to police its borders.
"We'll do our best," Syria's UN Ambassador Fayssal Mekdad told reporters afterwards. "We are ready to cooperate with the present, new Iraqi government to help wherever we can."
The Iraqi minister reaffirmed the transitional government's commitment to finish writing a new constitution by 15 August, put it to a referendum in October, and then hold elections for a constitutionally elected government in December.
Iraqis will vote in a referendum
on the constitution in October
Drafting a constitution that brings together the competing interests of all Iraqi groups "is the most critical test for the future of our country", Zebari said, stressing the importance of bringing all communities into the process.
He said the rejection of the new European Union constitution by French voters showed that "a permanent constitution is unlikely to succeed if drafted behind closed doors in isolation from the constituency".
Noting the tight deadline, Zebari urged the United Nations to accelerate its technical assistance to the Iraqi commission charged with drafting the constitution, warning that any delay "could provide a vacuum that anti-democratic forces could exploit".
'Harsh security situation'
UN diplomats: No new resolution
on foreign forces is needed
Acting US Ambassador Anne Patterson said the new Iraqi government had confronted "a harsh security situation", and the US-led force would not leave "until the Iraqis can meet the serious security challenges they face".
The force has trained and equipped 165,000 Iraqi soldiers and police, and the army has more than 90 battalion-level units conducting operations.
But more needs to be done so Iraqi forces can take control of the country's security and "develop the Iraqi public's confidence in their own security forces", Patterson said.
"A specific timeline for the withdrawal of multinational forces cannot be set," she added, and "any decision regarding force size will be driven by events on the ground".