"Stay the course"
In the document, first obtained by The New York Times and later confirmed by the Pentagon, Rumsfeld also suggested positioning "substantial US forces" near the Iranian and Syrian borders, saying they would "reduce infiltration and, importantly, reduce Iranian influence on the Iraqi government".
The memorandum's contents conflict with Rumsfeld's frequent calls in public for the US to "stay the course" in Iraq.
"I see this thing as classic Rumsfeld - this is the way he operates"
Lawrence Di Rita, former chief spokesman for Rumsfeld
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He also recommends a reduction of US bases in the country from 55 now to five by July next year.
Rumsfeld also recommended buying support from prominent figures in Iraq, saying the US should "provide money to key political and religious leaders ... to get them to help us through this difficult period".
Critics said that this could be divisive in Iraq as it is the same policy that was used by Saddam Hussein.
Asked by Al Jazeera what he thought of Rumsfled's suggestion of buying support from various elements in Iraq, Wamid Nazmi, a professor at Baghdad University, said: "I think all patriotic forces in this country would decline to receive money from the army of occupation."
"As far as the government and militias are concerned, I feel they are rich enough from American financial support, Iranian financial support and the diplomatic and financial support they get form so-called moderate Arab regimes."
Although he argues for keeping special forces troops in the country "to target al-Qaeda, death squads, and Iranians", Rumsfeld's memo suggests "drawing down all other coalition forces".
"Withdraw US forces from vulnerable positions - cities, patrolling, etc. - and move US forces to a Quick Reaction Force (QRF) status, operating from within Iraq and Kuwait, to be available when Iraqi security forces need assistance."
outgoing US defence secretary
He suggested that the White House should "... Withdraw US forces from vulnerable positions - cities, patrolling, etc - and move US forces to a Quick Reaction Force (QRF) status, operating from within Iraq and Kuwait, to be available when Iraqi security forces need assistance".
While clarifying that the withdrawal should be only "modest," he said the number of US trainers and advisers working with the fledgling Iraqi forces should "significantly increase".
The outgoing defence secretary also advocated punishing "bad behaviour" by provincial governments by taking away their reconstruction funding and providing troops "only for those provinces or cities that openly request US help and that actively co-operate".
The White House has refused to say whether George Bush, the US president, has read Rumsfeld's writings, but Erin Witcher, a spokeswoman, said the president has been dissatisfied with the progress in Iraq, and "the right thing to do is to re-evaluate our tactics".
"There are a number of reviews under way, and the president is open to listening to a wide array of options," the spokeswoman said.
Eric Ruff, the Pentagon press secretary, said that Rumsfeld does not endorse any one particular recommendation, and that he notes in the memo that "many of these options could and, in a number of cases, should be done in combination with others".
Lawrence Di Rita, who was Rumsfeld's chief spokesman until last spring, said that the broad range of options presented by Rumsfeld belies the notion that he is inflexible and reluctant to consider alternative approaches.
"I see this thing as classic Rumsfeld," Di Rita said. "This is the way he operates."
Rumsfeld remains defence secretary while Robert Gates, a former CIA director nominated for the position by Bush, is seeking senate confirmation for his position.
There is no hint in the memo that he intended to step down, but a person familiar with the sequence of events leading up to his resignation on November 8 told the Associated Press news agency that Rumsfeld knew when he wrote it that he would be leaving.
The Rumsfeld memorandum is the second sensitive government document expressing dissatisfaction with the current course in Iraq to be leaked to the media in less than a week.
Last week, The New York Times published a White House memo in which Stephen Hadley, the US national security adviser, expressed doubt about the ability of Nuri al-Maliki, the Iraqi prime minister, to control sectarian violence.
Source: Agencies and Al Jazeera